Kerwood v. Mortgage Bankers Ass'n of America, Inc.

• Decision Date: 24 June 1980
• Docket Number: Civ. A. No. 79-0889.
• Citation: 494 F. Supp. 1298
• Parties: Lewis O. KERWOOD, Plaintiff, v. MORTGAGE BANKERS ASSOCIATION OF AMERICA, INC., Defendant.
• Court: U.S. District Court — District of Columbia

494 F. Supp. 1298

Lewis O. KERWOOD, Plaintiff, v. MORTGAGE BANKERS ASSOCIATION OF AMERICA, INC., Defendant.

Civ. A. No. 79-0889.

United States District Court, District of Columbia.

June 24, 1980.

MacKenzie Canter, III, Washington, D. C., for plaintiff.

John E. Vanderstar, Washington, D. C., for defendant.

MEMORANDUM OPINION

JOYCE HENS GREEN, District Judge.

Plaintiff, Lewis O. Kerwood, was dismissed from his position as senior director of the education and training department of the defendant, Mortgage Bankers Association of America, Inc. (MBA), on August 22, 1978; at the time, he was 61 years of age. He has brought this suit alleging that his dismissal constituted unlawful age discrimination under the Federal Age Discrimination In Employment Act (ADEA), 29 U.S.C. § 621, et seq., as amended. Defendant, denying this assertion, contends that the plaintiff's termination was based entirely on factors unrelated to his age.

Created in 1967 for the express purpose of promoting "employment of older persons based on their ability rather than age" and prohibiting "arbitrary age discrimination in employment,"¹ the ADEA, energized by its 1978 amendments² envelops all manner of prohibition against such diverse employment practices as failure to hire, discharge, denial of employment opportunities³ and discrimination due to age concerning conditions of employment.

Courts agree this remedial, humanitarian legislation must be liberally construed to effectuate the congressional mandate of ending age discrimination in employment. Gabriele v. Chrysler Corp., 573 F.2d 949 (6th Cir. 1978); Dartt v. Shell Oil Co., 539 F.2d 1256 (10th Cir. 1976), aff'd, 434 U.S. 99, 98 S.Ct. 600, 54 L.Ed.2d 270 rehearing den., 434 U.S. 1042, 98 S.Ct. 785, 54 L.Ed.2d 792. Those subtleties inextricably woven through any form of prejudice particularly interline the creases of age where victims of discrimination, actual or apparent, represent the more vulnerable, sensitive members of our society.

The Court then is especially wary of the nuances of action and word and discerns whether, overt expression to the contrary, they in fact signify any form of age discrimination. In this climate each case, supported by its own underpinnings, must be scrubbed clean of the fog of discriminatory obfuscation creeping in "on little cat feet"⁴ in the guise of economic priority.

Did age then, impermissibly, play either any factor, or the determining factor, in plaintiff's dismissal from employment? Did the defendant design to replace its "over-40" employees with younger ones, for the purpose of reducing its salary and pension cases? Or, was the termination of plaintiff the result of his unsatisfactory performance and therefore fully appropriate within the exercise of reasoned business judgment?

The defendant corporation is a national trade association in the mortgage banking field, organized and existing under the laws of the State of Illinois, with its principal offices in the District of Columbia. Its membership exceeds 1900 companies.

Plaintiff commenced his employment with MBA in 1954 as its Director of Education and Research and sole member of this department. He was one of nine employees on the entire staff of MBA. The only educational activity then existing included one seminar, one textbook, and one economic retreat. At the time plaintiff left the defendant's employment in 1978, the MBA staff had become a highly departmentalized staff of approximately eighty employees with 16 people in plaintiff's department. During these twenty-four years plaintiff received substantial yearly increments to his salary which, at the time of his dismissal, was $48,000 annually.

As the senior director of his department, Mr. Kerwood had the principal responsibility for the development and overall management of an expanding and widely respected educational program. An illustrative, but not an exhaustive description of his duties, would include direction of the Senior Executives Conference,⁵ the enlargement of the one predecessor seminar to a school of mortgage banking,⁶ the continuing activities of the certified mortgage bankers program, the income property case study program, and the correspondence courses.⁷

It is plaintiff's contention that he was performing his duties in a highly satisfactory manner when a new, young, energetic executive vice president, Dr. Mark J. Riedy, joined MBA and determined, in part, plaintiff asserts, to achieve pension and salary economies by eliminating "older" employees (essentially, those 50 or more years of age).

The parties' positions can be more readily appreciated in consideration of the administrative structure of MBA. Its functions are conducted by a Board of Governors, consisting of approximately 90 presidents or other senior officers of member companies who are elected from the general membership and serve without pay. It is the policymaking body of the organization, with four elected officers: president, first vice-president, second vice-president, and treasurer. A person elected second vice-president normally progresses upward in succeeding years and becomes president for one year. The president (and the other officers to a lesser degree) have a substantial day-to-day involvement with the activities of MBA. An Executive Committee, comprised of the officers, the immediate past president, and seven other members appointed from the Board, makes decisions between Board meetings. Many other committees are chosen from the Board membership; these deal with administrative and housekeeping matters as well as substantive program matters.

MBA's staff is directed by an executive vice president, who is the most senior employee and the only paid officer. As MBA's chief administrative officer, he has full authority to employ and dismiss all other employees.

Dr. Oliver H. Jones, a nationally renowned economist and authority on real estate finance, served MBA as its executive vice president from 1968 to 1977; prior to this period he was defendant's research director.

During Dr. Jones' tenure as executive vice president, the MBA staff was frequently criticized by the members and officers for its lack of coordination and organization attributed to autonomism exercised by the department heads and other personnel, each operating independently of the others, thereby impairing the effectiveness of the overall operation. Plaintiff, a longtime associate and personal friend of Dr. Jones, was singled out as the prime example of a department head who operated his department as his own "fiefdom."

Dr. Jones and the Board had pronounced differences of administrative approach reflected primarily in Board actions of 1976 and 1977. There was a concern, inter alia, that the staff and plaintiff's department in particular were insufficiently responsive to the needs of the "income property" segments of the membership;⁸ confronted by the life insurance companies' threatened mass resignation revolt from MBA, and over Dr. Jones' protest, the Board forced establishment of a separate income property component within an existing MBA department.

When membership dues substantially increased in 1977, Dr. Jones was directed to institute appropriate revisions in MBA's method of budgeting its annual expenses and to allocate the overhead budget over all the operating departments pursuant to their contributions to overall profit. The Board discussed this proposed change with each department head; each was cooperative save for the plaintiff and Robert Gray (head of the public relations department) who demonstrated their distaste for the proposal. Kenneth Rothschild, 1976-1977 President of MBA, recalls Mr. Gray's presentation as a "fanciful absurdity;" although he had limited contact with plaintiff, he was negatively impressed with Mr. Kerwood's actions over a period of one year's discussion about the matter, recalling his "obnoxious, noncooperative manner."

In the spring of 1977, Dr. Jones could not be dissuaded from submitting his resignation effective October 31, 1977. He predicted the following years would produce a group of officers who were "managers," whose business administration style Dr. Jones could not accept.

During this interim period the functional direction of the staff was conducted by Peter M. Williams, previous head of MBA's management services department.

The Board established a search committee to locate Dr. Jones' replacement. Although many factors entered the quotient, including technical knowledge of real estate finance, the essential qualities required were strong management and able coordination skills. Sex and age were not considerations.

The search process led to the selection of Dr. Riedy as the new executive vice-president. He was the Board's sole nominee for this position, then 36 years old with impressive credentials. After receiving his doctorate in business economics he served with the Council of Economic Advisors, as special assistant to the Chairman of the Federal Home Loan Bank Board, and as vice-president and director of research of a private mortgage insurance company. At the time he was selected to head the MBA staff, Dr. Riedy was chief economist of the Federal Home Loan Bank in San Francisco. Those involved in the process were confident that their search had produced the administrative and managerial skills MBA needed.

Although Dr. Riedy was hired in October, 1977, he did not actually assume the helm in Washington, D. C. until January, 1978. In the three months preparation for the actual undertaking, Dr. Riedy had discussions with several hundred MBA members around the country, including committee chairmen, officers, and others who could provide him with substantive information about the operation of the staff. John C. Opperman, impending president of MBA, and also chairman of a mortgage company headquartered in San Francisco, had frequent opportunity to share MBA's staff and other internal administration problems with Dr....