Patterson v. Barney, CASE NO. CV F 10-2084 LJO BAM

CourtUnited States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Eastern District of California
Decision Date23 February 2012
Docket NumberCASE NO. CV F 10-2084 LJO BAM




Dated: February 23, 2012

(Doc. 30.)


Defendant Morgan Stanley Smith Barney ("MSSB")1 seeks summary judgment in the absence of sufficient evidence to support plaintiff Clarence Reith Patterson, Jr.'s ("Mr. Patterson's") age discrimination claim and that MSSB's grounds to terminate Mr. Patterson were a pretext for age discrimination. MSSB further seeks summary judgment given the lack sufficient evidence of malice or oppression and managing agent ratification of such conduct to support Mr. Patterson's punitive damages claim. Mr. Patterson responds that he survives summary judgment in that he satisfactorily performed financial advisor work and that evidence establishes MSSB's age discriminatory animus to terminate

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him. This Court considered MSSB's summary judgment motion on the record2 and VACATES the February 28, 2012 hearing, pursuant to Local Rule 230(g). For the reasons discussed below, this Court GRANTS MSSB summary judgment.



Shortly prior to his termination at age 64, Mr. Patterson was a relationship manager in the MSSB Fresno office with his sons. After Mr. Patterson's sons left MSSB, MSSB contends that it lacked a position for which Mr. Patterson was qualified. Mr. Patterson elected to be terminated rather than retire. Mr. Patterson pursues an age discrimination claim under FEHA3 and claims that he was denied wrongly to apply for a new position for which he was qualified. MSSB seeks summary judgment in that Mr. Patterson was unqualified for the new position to serve as a legitimate business reason, among others, for his termination.

Joint Production Team

In 1979, Shearson Hayden Stone, Inc. ("Shearson") hired Mr. Patterson as a financial consultant in its Fresno branch and later became MSSB. For five to six years during the mid-1980s to the late 1980s or early 1990s, Mr. Patterson served in the Fresno branch as an administrative manager or assistant branch manager in addition to his role as a financial consultant (later called financial advisor). Mr. Patterson ceased holding a MSSB management position in the 1990s.

In January 2002, Mr. Patterson's son Brian Patterson ("Brian") joined MSSB. Mr. Patterson and Brian entered into a team arrangement by which as MSSB financial advisors, they combined their books of business and split commissions.

In January 2004, Mr. Patterson's other son Kevin Patterson ("Kevin") joined MSSB. About two

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years later, Kevin enter into an arrangement with Mr. Patterson and Brian's team as a financial advisor.4 From that time to March 2009, Mr. Patterson, Brian and Kevin had a combined book of business as a team of financial advisors and split commissions. Mr. Patterson refers to his arrangement with Brian and Kevin as a "partnership."

MSSB attributes Mr. Patterson to have received the largest percentage share of commissions during the initial stages of the Patterson team. In his deposition, Kevin testified that "we were joined under a team number, the commissions got paid to the team, and then whatever percentages were associated with that team number . . . would get paid out to each person. Because depending on your length of service and things, the amount of commission you did depended how much you took home."

Kevin characterizes Mr. Patterson's duties as "basically service, calls." Mr. Patterson anticipated to continue to work several more years until age 66 or 67.

Mr. Patterson's Change In Work Arrangements

Starting in 2005, Mr. Patterson took time off from work to care for his wife who died of cancer in September 2008. Mr. Patterson decreased his office hours to about 20 hours a week, two or three days a week, worked from home, and focused on phone calls and client relationships. Mr. Patterson started to receive less of the Patterson team's revenues. During the year prior to his wife's death, Mr. Patterson, by his estimation, spent two half-days per week in the office. Kevin characterizes Mr. Patterson's duties during that time as to "glad hand the clients" and to "maintain" existing client relationships, not to attract new clients although Mr. Patterson attracted a "large" client.

Brian and Kevin expressed their desire to Mr. Patterson to contribute more effort to the Patterson team. Nonetheless, Kevin acknowledged: "It wasn't a necessity for him to have to be there five days a week eight hours a day."

According to then MSSB Fresno Branch Manager Jeff Branch ("Mr. Branch"),5 Brian and Kevin were concerned and frustrated about Mr. Patterson's work ethic, including limited office time and failure to make telephone calls. In his declaration, Mr. Branch states:

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Since around 2007 and continuing throughout their employment, his sons Brian and Kevin Patterson complained to me many times about how they felt that Skip Patterson6 was not coming into the office enough, was not productive and did not timely complete the client calls that they requested of him, and was not performing enough work as part of their team. Based on my observations and the information I received from his sons, I came to the conclusion that Skip Patterson was working minimal hours and was only minimally productive, at best.

After his wife died, Mr. Patterson returned to the office 2½ days per week and also worked at home.

Retirement Discussions

Mr. Patterson discussed with Brian that Mr. Patterson anticipated retiring at age 66 or 67. In his deposition, Mr. Patterson testified: "I was always talking about retirement, you know, that when you get my years of service and my age you're always talking about it." Mr. Patterson identified his "ultimate goal . . . was to go to 66, 67." Mr. Patterson confirmed that he frequently discussed retirement when at the Fresno branch. As to Mr. Patterson's retirement, Mr. Branch declared:

Since around 2007, Skip Patterson initiated many conversations with me about his impending plan to retire. For example, Skip Patterson told me several times that he planned to retire as soon as he received a payment from Citigroup (referred to as the "Shearson one-time payment"), which was scheduled to be paid in about 2009.

When asked about the Shearson one-time payment in his deposition, Mr. Patterson denied that he contemplated retirement on receipt of the payment and reiterated "I desired to stay . . . in my employment until 66 or 67."

Change To Support Position

During late 2008 and early 2009, Mr. Patterson considered changing to a position to support Brian and Kevin. MSSB notes that in March 2009, Mr. Patterson accepted a "relationship manager" position to support Brian and Kevin's continuing financial advisor team, which was to pay Mr. Patterson $37,500 annually from the team's revenues. Mr. Branch approved Mr. Patterson's change to relationship manager in March 2009. After Mr. Branch changed to a relationship manager, he worked two or so days a week in the office and notes that his duties "were to continue approximately the same." MSSB attributes Mr. Patterson to have continued to discuss retirement after his change to relationship manager.

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Mr. Patterson claims that he was unfamiliar with the term "relationship manager." Mr. Patterson testified that his understanding was "that while I was on this, it wasn't a permanent thing, did not have to be a permanent thing; that I would be paid by the firm so much a month" but no incentive compensation. According to Mr. Patterson, Mr. Branch explained that putting Mr. Patterson on a financial advisor paid status would result in Brian's and Kevin's splitting commissions as the "producers" at a higher commission percentage. Brian testified that "we did this so that the production would go to Kevin and I [sic], and the amount of money that we would make extra from his production would go to offset the pay decrease that we were going to take." Brian added that Mr. Patterson's job duties were not to change and the arrangement was "to capture more revenue . . . where we kept more of what we made and less went to the company" based on a MSSB commission schedule paying less (35 percent to 20 percent) to more experienced financial advisors. Mr. Patterson claims his duties remained unchanged with the new financial arrangement with Brian and Kevin.

Mr. Branch testified that the new financial arrangement addressed MSSB's "grid payout" whereby more experienced financial advisors need higher revenue volumes to maintain the compensation levels of less experienced financial advisors. Mr. Branch also offered Mr. Patterson the option of a "consulting group analyst," which analyzes "different portfolio managers who may be appropriate for their clients." According to Mr. Branch, Brian and...

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