MacDonald v. Eastern Wyoming Mental Health Center

• Decision Date: 15 August 1991
• Docket Number: No. 90-8069,90-8069
• Citation: 941 F.2d 1115
• Parties: 56 Fair Empl.Prac.Cas. (BNA) 1149, 57 Empl. Prac. Dec. P 40,918 James MacDONALD and Janice MacDonald, Plaintiffs-Appellants, v. EASTERN WYOMING MENTAL HEALTH CENTER, a Wyoming non-profit corporation, Eastern Wyoming Mental Health Center Board of Directors, Joe S. Schaid and Jane Stearns, Defendants-Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1115

941 F.2d 1115

56 Fair Empl.Prac.Cas. (BNA) 1149,

57 Empl. Prac. Dec. P 40,918

James MacDONALD and Janice MacDonald, Plaintiffs-Appellants, v. EASTERN WYOMING MENTAL HEALTH CENTER, a Wyoming non-profit

corporation, Eastern Wyoming Mental Health Center

Board of Directors, Joe S. Schaid and

Jane Stearns, Defendants-Appellees.

No. 90-8069.

United States Court of Appeals, Tenth Circuit.

Aug. 15, 1991.

Jay Dee Schaefer and Suzan C. Pauling of Schaefer and Associates, Laramie, Wyo., for plaintiffs-appellants.

Judith Studer of Schwartz, Bonn, McCrary & Walker, Casper, Wyo., for defendants-appellees.

Before McKAY, SETH and SEYMOUR, Circuit Judges.

SEYMOUR, Circuit Judge.

James and Janice MacDonald brought this action against the Eastern Wyoming Mental Health Center (Center), its Board of Directors, and two Board employees to obtain relief for the alleged improper termination of their employment at the Center. The MacDonalds asserted claims under the Age Discrimination in Employment Act, 29 U.S.C. §§ 621 et seq. (1988) (ADEA), and 42 U.S.C. § 1983 (1988), as well as under state law. The district court granted defendants' motion for summary judgment, concluding that the Center was not a state actor for purposes of section 1983 and that the MacDonalds had failed to make out a prima facie case of age discrimination. We affirm, albeit on grounds different from those relied upon below with respect to the ADEA claim.

The MacDonalds, husband and wife, were both employed at the Center from mid-1984 until April 1988, James as a psychologist and Janice as a therapist. At a meeting of the Board on December 14, 1987, James reported what he considered to be unethical practices taking place at the Center. On January 5, 1988, James was advised that he would be put on immediate disciplinary probation for six months due to an undisclosed breach of confidentiality and "other negative community feedback." Rec., vol. I, doc. 22 at ex. C. When he refused to accept the probation, his employment was terminated. The letter informing him of this decision stated several reasons for his discharge: the breach of confidentiality, omissions in his original employment application, "manufactured expense items," and behavior and attitude problems. Id. ex. F. Janice was also discharged, allegedly for "verbally restricting professional employees" of the Center, taking leave of absence without notice, and failing to keep scheduled appointments. Id. ex. R.

In their complaint, the MacDonalds sought relief under section 1983, alleging that they were unlawfully discharged for exercising their First Amendment right to speak out about unethical Center practices. In addition, Janice claimed infringement of her First Amendment associational rights, alleging that she was discharged because she was married to James. The MacDonalds also asserted a liberty interest deprivation due to the stigma arising from their discharge and their inability to take advantage of other employment. Finally, the MacDonalds contended they were discharged due to age discrimination in violation of the ADEA.

The district court granted defendants' motion for summary judgment on the claims under both section 1983 and the ADEA. "In reviewing a grant of summary judgment, we utilize the same standard that the district court employs." Merrick v. Northern Natural Gas Co., 911 F.2d 426, 429 (10th Cir.1990). We must view the evidence and any possible inferences most favorably to the nonmoving party to ascertain whether a genuine issue of fact exists. Id. "We review any legal questions de novo." Id.

I.

The district court denied the MacDonalds' claims for relief under section 1983 after concluding that the Center was not a state actor. Section 1983 provides a remedy for federal constitutional and statutory deprivations by a person acting "under color of any statute, ordinance, regulation, custom, or usage, of any State or Territory." 42 U.S.C. § 1983. Thus, "[t]he ultimate issue in determining whether a person is subject to suit under § 1983 is whether the alleged infringement of federal rights is fairly attributable to the state." Tarabishi v. McAlester Regional Hosp., 827 F.2d 648, 651 (10th Cir.1987).

The Center is a private corporation which has contracted with a state agency to provide mental health services. The personnel policies of private contracting agencies such as the Center are regulated by state standards. Moreover, the Center receives the majority of its funding from the state. We have recognized that "power entrusted to the government by the people can ultimately be exercised through nominally private entities, be it through the government's delegation, compulsion, concerted action, or acquiescence." Gilmore v. Salt Lake Community Action Program, 710 F.2d 632, 635 (10th Cir.1983). We have further stated that "when these nominally private parties exercise governmental power, they shall not exercise it insulated from constitutional constraints. The problem remains in distinguishing the exercise of governmental power from benign or tangential governmental involvement." Id. at 635-36.

In essence, the MacDonalds argue that the Center should be considered a state actor due to the pervasive state regulation and monitoring of the Center's personnel standards, and its receipt of state funds. However, "governmental funding and regulation of an ostensibly private organization, in the absence of other factors, is insufficient to establish governmental action." Id. at 636. Even where such regulation and funding are present, state action will not be found absent evidence of state influence, involvement, or control over the personnel decisions which are the subject of challenge. See id.; see also Casias v. City of Raton, 738 F.2d 392, 396 (10th Cir.1984). The MacDonalds have presented no evidence tending to prove that the state was involved in the Center's decision to discharge them. Absent any showing that the state directed, controlled, or influenced this particular personnel decision, we conclude that the MacDonalds have failed to create a fact issue as to the presence of state action. Accordingly, summary judgment for defendants on the section 1983 claims was proper.

II.

The district court granted defendants' motion for summary judgment on the ADEA claims upon concluding that the MacDonalds had failed to make out a prima facie case of age discrimination. On appeal, the MacDonalds argue that in so doing the district court misapplied the law to the record. As discussed below, we agree that the lower court erred in concluding that no prima facie case had been established. However, we affirm the summary judgment because the record contains no evidence that defendants' actions were a pretext for age discrimination.

We begin by observing that "[t]he ADEA is remedial and humanitarian legislation and should be liberally interpreted to effectuate the congressional purpose of ending age discrimination in employment." Dartt v. Shell Oil Co., 539 F.2d 1256, 1260 (10th Cir.1976), aff'd, 434 U.S. 99, 98 S.Ct. 600, 54 L.Ed.2d 270 (1977).

"Age discrimination may be subtle and even unconscious. Even an employer who knowingly discriminates on the basis of age may leave no written records revealing the forbidden motive and may communicate it orally to no one. When evidence is in existence, it is likely to be under the control of the employer, and the plaintiff may not succeed in turning it up."

LaMontagne v. American Convenience Prods., Inc., 750 F.2d 1405, 1410 (7th Cir.1984) (citation omitted). ADEA plaintiffs, therefore, may establish discrimination indirectly through the three-part framework applicable to discrimination claims under Title VII and set out in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973), and its progeny. See Cooper v. Asplundh Tree Expert Co., 836 F.2d 1544, 1547 & n. 1 (10th Cir.1988).

Under the McDonnell Douglas test, the plaintiff bears the burden of establishing a prima facie case of discrimination. Texas Dep't of Community Affairs v. Burdine, 450 U.S. 248, 253, 101 S.Ct. 1089, 1093, 67 L.Ed.2d 207 (1981). The Supreme Court has stated that this burden "is not onerous." See id. Establishment of a prima facie case creates a presumption of unlawful discrimination that requires a defendant to come forward with evidence of a nondiscriminatory reason for its action. Id. at 254-55, 101 S.Ct. at 1094-95. The plaintiff then must have a full and fair opportunity to demonstrate that the defendant's proffered reason was pretextual, which merges with the plaintiff's ultimate burden of proving intentional discrimination. Id. at 255-56, 101 S.Ct. at 1094-95.

In the context of an age discrimination discharge claim, a plaintiff in this circuit makes out a prima facie case by showing that (1) she was within the protected age group, (2) she was doing satisfactory work, (3) she was discharged, and (4) her position was filled by a younger person. See Cooper, 836 F.2d at 1547. Here, the district court concluded that the MacDonalds did not satisfy the second prong because they failed to present sufficient evidence that their work was satisfactory. The court recited the Center's proffered reasons for discharge and the MacDonalds' evidence that they had never received unfavorable evaluations or discipline until March 1988, and concluded that the MacDonalds had not introduced evidence on which a jury could reasonably find that their work after March 1988 was satisfactory. The court thus required the MacDonalds to disprove the reasons given for their discharge in order to establish a prima facie case.

To begin with, the court erred in giving dispositive weight to its conclusion that the MacDonalds failed to disprove defendants' reasons for discharge. "[A] plaintiff need not prove that the reasons offered by the defendant are false if [she or he] proves that age was also a reason, and that age was the factor that made a difference." EEOC v....