Lovelace v. Sherwin-Williams Co., SHERWIN-WILLIAMS

Citation681 F.2d 230
Decision Date15 June 1982
Docket NumberSHERWIN-WILLIAMS,No. 80-1879,80-1879
Parties29 Fair Empl.Prac.Cas. 172, 29 Empl. Prac. Dec. P 32,833 Wilbur L. LOVELACE, Appellant, v.COMPANY, Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals (4th Circuit)

Samuel M. Millette, Charlotte, N. C. (Ernest S. DeLaney, III, DeLaney, Millette, DeArmon & McKnight, P. A., Charlotte, N. C., on brief), for appellant.

Harvey L. Cosper, Jr., Charlotte, N. C. (Golding, Crews, Meekins, Gordon & Gray, Charlotte, N. C., on brief), for appellee.

Before BRYAN, Senior Circuit Judge, and PHILLIPS and ERVIN, Circuit Judges.


The plaintiff sought damages from his former employer for an alleged violation of the Age Discrimination in Employment Act (ADEA). The plaintiff's claim, centered on his demotion from a position as store manager, was submitted to a jury which returned a verdict in his favor. Thereafter, however, the district judge granted the defendant's motion for judgment notwithstanding the verdict. The plaintiff appealed, and we affirm.


In November 1978, Wilbur Lovelace, then age 55, was demoted from his position as manager of the larger of two Sherwin-Williams stores in Asheville, North Carolina. The store, which retails paint and related decorator and hardware products, was then one of approximately 1400 Sherwin-Williams stores across the nation and one of the two largest in an "Asheville district" consisting of sixteen stores in parts of North Carolina, Tennessee and Virginia. The manager of this district since 1974 had been R. L. Cardwell. Cardwell was in turn supervised by G. R. Davenport, the manager of a mid-south region consisting of 139 stores including the sixteen in the Asheville district.

At the time of his demotion, Lovelace had been employed by Sherwin-Williams for over 30 years and had managed the Asheville store for the past 23. It is undisputed that until late 1976 Sherwin-Williams was entirely satisfied with Lovelace's performance as manager. Lovelace introduced into evidence a January 1977 appraisal prepared by Cardwell which rated Lovelace's "overall performance" as of "high standard." 1 With the exception of notations that Lovelace needed to work more closely with his staff and that Lovelace had responded negatively and vocally to a then-new compensation program for store managers, the appraisal was generally quite laudatory. Indeed Cardwell noted in the evaluation that Lovelace was "promotable now" and could function well as the district manager. Lovelace testified that he had in fact been offered, but had rejected, this latter job in 1974 before the position was awarded to Cardwell.

Lovelace also produced at trial sales and profit records for the stores in the district for the period from 1970 through 1978. These records showed that during this time the Asheville store's net sales increased every year but one (1975) and that the store showed a net profit every year but one (1977). In 1977, the store lost $5,000 on net sales of over $873,000. 2 The same sales records also showed, however, that although the Asheville store's profits increased from 1970 to 1974, its profit trend was in unmistakable decline for the four following years. On this point, the defendant brought out that the same records showed that by 1978 the Asheville store's profit to inventory ratio and profit to total sales ratio were the lowest of any of the 29 similarly-sized stores in the mid-south region.

Lovelace also testified that in mid-1977 Cardwell began visiting the Asheville store much more frequently than in the past. Lovelace asserted that Cardwell simultaneously began a campaign of fault-finding and report-writing to provide support for the later demotion. Lovelace testified, for example, that Cardwell instructed him to complete store maintenance projects that were impossible given the available staff and complained about problems, such as customer complaints, that did not exist. Lovelace also testified that Cardwell created a morale problem among employees by speaking with them individually about store problems.

The defendant produced in rebuttal what the district court characterized as "overwhelming" evidence of a legitimate reason for Lovelace's demotion. Cardwell agreed that in mid-1977 he began visiting the Asheville store more frequently, for the purpose of discovering and treating the causes of the then-evident downward trend in profits. He testified that during these visits he saw unmistakable signs of what he considered to be poor organization and management. For example, he found employees unable to handle many business inquiries and generally unaware of national sales promotions in progress; store aisles usually cluttered and shelves often messy and inadequately stocked; items frequently not visibly priced; files and bulletin boards containing obsolete materials; books and records poorly maintained; overall housekeeping poor; and Lovelace with an "attitude" problem about undertaking proposed changes.

In August of 1977, Cardwell prepared a four-page action plan, introduced into evidence, calling for Lovelace to tackle these and other problems. Cardwell testified that a month later most of the problems had not been addressed and some had actually worsened. In January of the next year Cardwell prepared another action plan, requiring Lovelace to recommend plans to improve sales in two specific areas, equipment and art supplies, that had been particularly slow. Lovelace never prepared these recommendations. On another occasion, the company initiated a target account program known as "MAP," with every manager required to select 10 prospective accounts, to identify specific problems faced in selling each account, and then to make initial contact with each of the ten. Lovelace's report was submitted a month and a half late and simply listed ten potential customers without any discussion.

In the spring of 1978, Davenport asked Cardwell to rank comparatively, based on seven different criteria, each of the store managers in the Asheville district. 3 Cardwell's opinion of Lovelace's performance had changed dramatically from that expressed in the January 1977 appraisal. Cardwell ranked Lovelace no higher than 12th in any of the seven categories and last overall.

Shortly thereafter Cardwell used one of his visits to the store to interview Lovelace's staff. Cardwell testified that he found the employees still unaware of sales promotions and generally unsure of their specific duties. He also heard repeated complaints about the store's disorganization and found employee morale dangerously low. One employee, newly transferred to the position of outside sales representative, was particularly upset that Lovelace would not train him for his new job, despite specific instructions from Cardwell to do so. This employee eventually requested a transfer from the store.

In early July, without notice to either Lovelace or Cardwell, the Asheville store was audited. Expenses were found to be $21,000 over budget and $54,000 greater than the year before. The report noted that internal operations needed the personal attention and follow-up of the store manager, as many of the problems found had been listed in the audit of the previous year. Cardwell testified that the audit findings reinforced his opinion that organization and management in the store were not improving.

Later that same month, Cardwell asked Davenport, to whom he had already mentioned problems in the Asheville store, to visit and observe the store's operations. Davenport, then in his mid-fifties, spent a full day studying the store and interviewing employees. He testified that he too found problems in supervision, housekeeping and merchandising, as well as widespread employee dissatisfaction. He discussed these problems briefly with Lovelace and soon thereafter addressed the three major problems in a letter. In this letter Davenport first criticized Lovelace's attitude and specifically his inability to accept suggestions and orders from his superiors. Second, Davenport indicated that organizational problems had reached a point that Lovelace risked losing total control of the store. Third, Davenport criticized Lovelace's failure to communicate with or train his staff. The letter concluded, "Bill, you must get control again of the Asheville store as we cannot wait for disaster to hit and then go to work to improve."

In October the outside sales representative at the store asked to be relieved of his position, largely because of dissatisfaction with Lovelace. Cardwell then talked with Davenport about using the opportunity to move Lovelace, still respected as a salesman with a good reputation in the community, into the sales representative position and replace him with a new manager. Cardwell wanted the replacement to be Laurence Atkins, then manager of a store in Waynesville, North Carolina. Cardwell had ranked Atkins first overall among all managers in his comparative ratings earlier that year. 4

Davenport agreed to the change. He testified that he then made special arrangements to provide Lovelace with a salary well above the maximum scale for the outside sales representative position. He also authorized a bonus program that would allow Lovelace to earn a salary close to what he had received as manager. Lovelace was told of the change in November and quickly agreed to accept the new job. On December 1 Atkins officially took control. He was then 49 years old, six years younger than Lovelace and had recently undergone surgery for removal of a cancerous bladder. He was replaced at the Waynesville store by a man of 50, or one year older than himself. At the time of the change in Asheville, 6 of the 16 managers in the district were over 50.

Atkins testified at trial that on becoming manager he found problems at the store of the kind testified to by Cardwell and Davenport. He stated, for example, that many employees were...

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