Michas v. Health Cost Controls of IL

Decision Date06 April 2000
Docket NumberNo. 99-2221,99-2221
Citation209 F.3d 687
Parties(7th Cir. 2000) Christopher J. Michas, Plaintiff-Appellant, v. Health Cost Controls of Illinois, Inc., Defendant-Appellee
CourtU.S. Court of Appeals — Seventh Circuit

Before Bauer, Ripple and Kanne, Circuit Judges.

Kanne, Circuit Judge.

Christopher Michas brought suit against his former employer, Health Cost Controls, Inc. ("HCC"),1 claiming that HCC wrongfully terminated him on the basis of his age, in violation of the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. sec. 621 et seq. Following discovery, HCC moved for summary judgment, and the district court granted HCC's motion. The district court found that Michas had not made a prima facie case because he failed to present sufficient evidence that his duties had been transferred to similarly situated employees who were not within the protected class and he failed to present evidence that HCC's reasons for his dismissal were pretextual. Michas appeals both decisions. We affirm.

I. History

The district court found that Michas failed to comply with Local Rule 12(N),2 so the court made undisputed findings of fact based on HCC's Local Rule 12(M) submissions. As a threshold matter, Michas argues that the district court erred because his statement of additional facts, filed in accordance with Local Rule 12(N)(3)(b) and simultaneously with his Rule 12(N)(3)(a) response, raised genuine issues of material fact that must be construed in his favor. HCC properly submitted its Rule 12(M) uncontested findings of facts, and Michas's Rule 12(N)(3)(a) response to these facts never accompanied its denials of HCC's facts with citations to the record. "An answer that does not deny the allegations in the numbered paragraph with citations to supporting evidence in the record constitutes an admission." McGuire v. United Parcel Serv., 152 F.3d 673, 675 (7th Cir. 1998).

That Michas's simultaneous submission of additional findings of fact might pose a challenge to these admissions is not relevant to whether Michas properly filed his Rule 12(N)(3)(a) answer. The purpose of the Rule 12(N)(3) (b) statement is to provide additional uncontested facts not raised in the movant's Rule 12(M) statement; its purpose is not to provide a forum to contest facts that should have been contested in the non-movant's Rule 12(N)(3)(a) statement. Therefore, we conclude that the district court did not err in accepting HCC's statements as uncontested, and we will do likewise. However, to the extent that facts included in Michas's Rule 12(N)(3)(b) statement prove relevant, we will consider these as well as the admitted facts from the 12(M) statement in a light most favorable to Michas.

A. Background

In 1963, Michas graduated from law school and began to work for Montgomery Ward & Co. in its corporate legal division located in Chicago. During the course of his employment at Montgomery Ward, Michas became acquainted with William Hanley, an attorney employed by Montgomery Ward in its labor relations department. In the mid- 1960s, Hanley left Montgomery Ward and entered private practice.

In 1991, Montgomery Ward laid off most of its corporate legal division, preferring instead to out-source its legal work to the law firm of Altheimer & Gray. Michas was one of the attorneys laid off by Montgomery Ward. In March 1992, Michas met Hanley again and told him that he was unemployed. Hanley worked as a partner in a private law firm, and in addition, he had recently formed a new corporation, HCC. Hanley referred Michas to a number of private law firms, but these leads did not pay off. Ultimately, Hanley introduced Michas to HCC's co-founder and CEO, John Demaret.

B. HCC

HCC asserts subrogation rights on behalf of HMOs, health insurance carriers and other health care plans against parties who may be liable in tort to insured members of these organizations or their members. In addition, HCC asserts the contractual rights of health care organizations against their members and insureds. HCC was formed in 1988 by Hanley and Demaret, and during all relevant periods, Hanley and Demaret were the principal stockholders of the corporation. Demaret also served as HCC's president and CEO and ran the day-to-day operations of the company, while Hanley was HCC's chairman of the board and worked primarily on marketing the company.

HCC's employees worked as teams. Each team was composed of attorneys, who acted as supervisors, and claims adjusters. The teams attempted to settle claims subrogated to HCC. If these claims proceeded to litigation, the teams referred the claims to Demaret who, in turn, generally referred these claims to outside counsel for the litigation.

C. Michas's Employment with HCC

Soon after meeting Demaret, Michas began to work for HCC as a contract attorney. The relationship initially proved favorable, and in July 1992, Demaret and Hanley hired Michas to work full-time as head of HCC's legal department. The "legal department" consisted of Michas, a paralegal and a secretary. Michas reported to Demaret on all matters. Michas's primary job responsibilities included research, advising staff on legal issues and acting as liaison to the outside counsel who handled HCC's core business of litigation. As a part of this liaison activity, Michas was responsible for monitoring the fees charged by outside counsel, and Michas also helped Demaret manage some of the claims that outside counsel litigated for HCC.

Soon after Michas began to work for HCC, Demaret became dissatisfied with Michas's work performance. The parties disagree over the extent that Michas was informed of this growing dissatisfaction. HCC has no formal evaluation procedure, and as a result, much of the evidence produced about Michas's performance comes from the parties' deposition testimony. Michas was given an incremental raise each year and a small bonus in December 1993. Michas claims that Hanley and Demaret told him when he was given these raises that everything was fine with his performance. Nonetheless, Demaret and Hanley refused his request for a more substantial raise in 1994. Demaret, Hanley and one of the team leaders, Stephen Prazuch, all testified to Demaret's dissatisfaction with Michas's performance, and on a number of occasions, Demaret criticized Michas's performance in short memos written to Michas.

In late 1994, Demaret began to consider ways to improve the performance of his legal department. He and Michas discussed expanding the department, but Demaret ultimately decided against this strategy. Hanley also asked Michas if he would prefer to act as a team supervisor. Michas declined this offer, so HCC hired another attorney to fill this role. In early 1995, HCC hired a new chief financial officer, Michael Neil, a move that raised the fixed costs of the firm. About the same time, a number of HCC's larger clients indicated their desire to cut ties with the company. Faced with rising fixed costs and a potentially precipitous decline in revenue, Demaret began to consider laying off the legal department.

In April 1995, Neil produced a summary detailing the costs associated with maintaining the legal department. The summary showed that HCC would save $114,697 by dissolving the legal department, and of this sum, $81,947 would be saved by Michas's discharge. Armed with these numbers and the threat of lower revenues, Demaret convinced an initially hesitant Hanley that the legal department must be laid off. On April 24, 1995, Hanley and Demaret informed Michas that they were firing him. Demaret and Hanley told Michas that they were trying to reduce operating costs in the face of a potential loss of important clients. On that date, HCC also fired the rest of the legal department--the secretary and the paralegal--along with Michas. The secretary was a member of the class protected by the ADEA, which is to say that she was over forty years old, but the paralegal was not. Michas was fifty-five years old at the time of his discharge.

D. HCC's Later Activities

After the legal department was disbanded, Demaret assumed most of Michas's responsibilities and delegated the remainder of Michas's duties to the team supervisors. Demaret is older than Michas and a member of the protected class, but some of the team supervisors who assumed Michas's responsibilities were not members of the protected class.

About the same time that HCC laid off its legal department, HCC was approached by a venture capital firm, JMI, which was interested in purchasing the company. As a part of the deal, JMI requested that HCC hire consultant John Blaney, who has since become president of the company. Blaney was hired on April 25, 1995, the day after Michas's discharge, at a salary of $180,000 per year. Negotiations over the purchase progressed through mid-1995, and in July, Demaret decided that he again needed an in-house attorney. Demaret wanted the new attorney to manage outstanding cases, so that he could focus on preparing HCC to be sold. Thus, the new attorney would assume a role similar in many respects to the role Michas served before his discharge.

HCC initially offered the job to Prazuch, a team leader. Prazuch was not a member of the protected class. Prazuch initially accepted the offer, but after further consideration, he decided to refuse. Instead, in October 1995, HCC hired Henry Romano as corporate counsel. Romano assumed most of Michas's previous functions, as well as many functions that had never been delegated to Michas. Romano was a member of the protected class. In late 1995, JMI completed the purchase of a majority of HCC's outstanding stock. For this reason, Demaret no longer maintains an active role in the company. Most of the case management duties once performed by Demaret are now...

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