Logue v. International Rehabilitation Associates, Inc., 87-3156

• Decision Date: 20 January 1988
• Docket Number: No. 87-3156,87-3156
• Parties: 45 Fair Empl.Prac.Cas. 1382, 45 Empl. Prac. Dec. P 37,711 Anne M. LOGUE, Plaintiff-Appellee, v. INTERNATIONAL REHABILITATION ASSOCIATES, INC., et al., Defendants-Appellants.
• Court: U.S. Court of Appeals — Third Circuit

Page 150

837 F.2d 150

45 Fair Empl.Prac.Cas. 1382,

45 Empl. Prac. Dec. P 37,711

Anne M. LOGUE, Plaintiff-Appellee, v. INTERNATIONAL REHABILITATION ASSOCIATES, INC., et al Defendants-Appellants.

No. 87-3156.

United States Court of Appeals Third Circuit.

Argued Oct. 6, 1987.

Decided Jan. 20, 1988.

Francis M. Milone (argued), Morgan, Lewis & Bockius, Philadelphia, Pa., for defendants-appellants.

David B. Mulvihill (argued), Mansmann, Cindrich & Titus, Pittsburgh, Pa., for plaintiff-appellee.

Before BECKER, SCIRICA and ROSENN, Circuit Judges.

OPINION OF THE COURT

SCIRICA, Circuit Judge.

This is an appeal in a suit alleging sex discrimination. Appellant International Rehabilitation Associates ("IRA" or "the company") appeals from the judgment granted in favor of one of its former employees, appellee Anne M. Logue ("Logue"), in a suit alleging employment discrimination under Title VII of the Civil Rights Act of 1964, 42 U.S.C. Sec. 2000e et seq. (1982) ("Title VII"). IRA maintains that the district court misapplied the legal standard under McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973), and Texas Dept. of Comm. Affairs v. Burdine, 450 U.S. 248, 101 S.Ct. 1089, 67 L.Ed.2d 207 (1981). Specifically, IRA argues that the court failed to consider evidence presented by IRA to rebut Logue's prima facie case of discrimination. We conclude that the district court misapplied the standard governing sex discrimination. We will vacate the district court's judgment and remand for further proceedings consistent with this opinion.

I. Background

IRA is a rehabilitation service company, retained primarily by insurance carriers and self-insured employers to provide vocational and physical rehabilitation services to disabled persons. ¹ Although IRA markets its services nationally, the events leading to this litigation occurred within the company's central region, which covers the eastern part of the United States from New York to Virginia. The central region contains several districts, each headed by a district office. Within each district are a number of branch offices. Each branch manager supervises various kinds of employees, including account representatives, rehabilitation supervisors, and vocational and rehabilitation specialists. Account representatives are responsible for marketing IRA's services to existing and potential customers. Vocational and rehabilitation specialists, who provide the actual services to the injured person, report to a rehabilitation supervisor.

IRA hired Logue in January, 1978, as a vocational specialist in its Pittsburgh district office. At that time, the Pittsburgh office handled the marketing and servicing for the state of Ohio. Within five months Logue was promoted to rehabilitation supervisor, a position which required her to supervise a number of vocational specialists who serviced the state of Ohio. In June, 1980, she was promoted to account representative and became responsible for marketing IRA's services in Ohio. Her immediate supervisor was Sharon Mains, who at the time was the Pittsburgh district manager.

In 1981, IRA decided to open a branch office in Columbus, Ohio, to service the entire state of Ohio. Mains selected Logue to open that office and act as its branch manager. After the Columbus office began operation in October, 1981, Logue not only performed her supervisory duties as branch manager, but also marketed IRA's services in Ohio, until Stewart Cohen, a vocational specialist, became account representative for the northern half of the state. Logue remained responsible for marketing the southern half of Ohio until June, 1982, when she promoted Kenneth Ross, another vocational specialist, to the position of account representative for that area.

Mains resigned from IRA in May, 1982. The following September, Lawrence Rozanski became the new district manager in Pittsburgh. In early 1983, he and Leo Hamilton, Vice President for the central region, decided to open an additional office in Cleveland. Stuart Cohen was chosen to be the branch manager for this new office, and Ross was selected to replace Logue in Columbus. IRA discharged Logue in March, 1983.

On December 23, 1985, Logue filed suit, ² claiming that IRA terminated her employment because of her sex, in violation of Title VII. The district court conducted a nonjury trial that lasted three days. At the trial, Logue testified that although she was qualified for her position, IRA replaced her with a less experienced male employee, Kenneth Ross. To counter Logue's claim, IRA offered evidence (1) that it established a new management structure for Ohio which altered the nature of the position of branch manager and led to the elimination of one management position; (2) that IRA selected Ross over Logue because Ross' abilities as a marketing representative were considered outstanding; and (3) that Logue refused IRA's offer of a new job in Cincinnati and resigned from IRA.

At the conclusion of the trial, the district court found that Logue had presented a prima facie case of discrimination. ³ Appendix ("App.") at 472. The court then evaluated what it perceived to be IRA's proffered reasons for terminating Logue: (1) she resigned; (2) she refused the offer of a new position with IRA in Cincinnati; and (3) her performance was inadequate. Id. at 472-73. The court concluded that these explanations were pretextual. First, the court pointed out that the record contained no evidence that Logue had resigned. Id. at 472. ⁴ With respect to the alleged job offer in Cincinnati, the court found that no such position even existed until two years after Logue had left IRA. Id. at 472-73. Finally, the court rejected the claim that Logue's performance had been inadequate, finding not only that IRA's statistics were "confusing" and contradictory, but also that they failed to account for the fact that Logue had been given a tremendous amount of responsibility when she became branch manager in Ohio. Id. at 473-75. Based on these findings, the court decided that Logue's discharge resulted from sex-based discrimination. Id. at 476. On February 4, 1987, the district court entered final judgment in favor of Logue, awarding her reinstatement and back pay. This appeal followed.

II. Governing Law

In determining whether the district court misapplied the legal standard governing sex discrimination, we exercise plenary review. See United States v. Adams, 759 F.2d 1099, 1106 (3d Cir.), cert. denied, 474 U.S. 971, 106 S.Ct. 336, 88 L.Ed.2d 321 (1985); Gaines v. Amalgamated Ins. Fund, 753 F.2d 288, 289-90 (3d Cir.1985).

In order to prove sex discrimination under Title VII, the plaintiff must show that her status as a minority class was a determinative factor in the employment decision. See Burdine, 450 U.S. at 257, 101 S.Ct. at 1095; Bellissimo v. Westinghouse Elec Corp., 764 F.2d 175, 179 & n. 1 (3d Cir.1985),cert. denied, 475 U.S. 1035, 106 S.Ct. 1244, 89 L.Ed.2d 353 (1986); Duffy v. Wheeling Pittsburgh Steel Corp., 738 F.2d 1393, 1395 (3d Cir.), cert. denied, 469 U.S. 1087, 105 S.Ct. 582, 83 L.Ed.2d 702 (1984). The method of proof in Title VII cases is well settled. First, the plaintiff must prove by a preponderance of the evidence a prima facie case of discrimination. Burdine, 450 U.S. at 252, 101 S.Ct. at 1093; Bellissimo, 764 F.2d at 179. After the plaintiff has established a prima facie case, the burden shifts to the defendant to produce evidence of a "legitimate, nondiscriminatory reason for the employee's rejection." Burdine, 450 U.S. at 252, 101 S.Ct. at 1093; Bellissimo, 764 F.2d at 179. Once the defendant's evidence creates a genuine issue of fact, the presumption of discrimination drops from the case. Burdine, 450 U.S. at 254-55, 101 S.Ct. at 1094-95; Bellissimo, 764 F.2d at 179; Robinson, 771 F.2d at 777 n. 13. At this point the plaintiff, who retains the ultimate burden of persuasion, must prove by a preponderance of the evidence that the defendant's proffered reasons were merely a pretext for discrimination. Burdine, 450 U.S. at 257, 101 S.Ct. at 1095; Chipollini v. Spencer Gifts, Inc., 814 F.2d 893, 898 (3d Cir.), cert. dismissed, --- U.S. ----, 108 S.Ct. 26, 97 L.Ed.2d 815 (1987); Robinson, 771 F.2d at 777 n. 13; Bellissimo, 764 F.2d at 180 (3d Cir.1985). The plaintiff may refute the employer's explanation through either direct or indirect proof. Burdine, 450 U.S. at 257, 101 S.Ct. at 1095. Specific evidence showing that the employer's proffered reason is unworthy of credence would suffice to meet the plaintiff's burden. See Sorba v. Pennsylvania Drilling Co., 821 F.2d 200, 202 (3d Cir.1987); Chipollini, 814 F.2d at 900.

III. Discussion

The district court's finding that Logue established a prima facie case of sex discrimination is not an issue in this appeal. IRA, however, contends that the court incorrectly applied the legal standard governing sex discrimination. Specifically, IRA argues that the district court erred in failing to address the legitimate, nondiscriminatory reasons offered by IRA for the termination of Logue. We agree. The court failed to address and make appropriate findings of fact and conclusions of law with respect to two specific nondiscriminatory business reasons articulated by IRA: the restructuring of management for the state of Ohio and the superior qualifications of Ross for the newly structured position of branch manager at Columbus. For this reason, we decline to review the other findings and conclusions in the bench opinion.

The record contains ample evidence that IRA substantially changed its management structure in Ohio. Before IRA's reorganization, the Columbus branch manager primarily supervised cases throughout the entire state, while two account representatives conducted the marketing of IRA's services. App. at 183-85, 637. After the restructuring, IRA had branch managers in Columbus and Cleveland; and each was responsible both for marketing and for case...