Purcell v. Seguin State Bank and Trust Co.

• Decision Date: 02 September 1993
• Docket Number: No. 92-5598,92-5598
• Citation: 999 F.2d 950
• Parties: 62 Fair Empl.Prac.Cas. (BNA) 1336, 62 Empl. Prac. Dec. P 42,573 Walter P. PURCELL, Plaintiff-Appellee, Cross-Appellant, v. SEGUIN STATE BANK AND TRUST COMPANY, Defendant-Appellant, Cross-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 950

999 F.2d 950

62 Fair Empl.Prac.Cas. (BNA) 1336,

62 Empl. Prac. Dec. P 42,573

Walter P. PURCELL, Plaintiff-Appellee, Cross-Appellant, v. SEGUIN STATE BANK AND TRUST COMPANY, Defendant-Appellant,

Cross-Appellee.

No. 92-5598.

United States Court of Appeals, Fifth Circuit.

Sept. 2, 1993.

Douglas W. Sanders, Wright & Greenhill, Robert D. Kilgore, Foster, Heller & Kilgore, San Antonio, TX, for appellant.

Douglas H. Chilton, Mabry, Herbeck & Chilton, Texas City, TX, Hubert L. Gill, Schaubhut & Gill, Austin, TX, for appellee.

Appeals from the United States District Court for the Western District of Texas.

Before REYNALDO G. GARZA, WILLIAMS ^*, and JONES, Circuit Judges.

JERRE S. WILLIAMS, Circuit Judge:

In early 1989, Seguin State Bank and Trust Company replaced 60-year-old plaintiff, Walter P. Purcell, as manager of the Bank's trust department. His replacement was a man 37 years of age; Purcell was 60. Purcell brought suit in federal court, claiming violations of the Age Discrimination in Employment Act (ADEA) and of the Employee Retirement Income Security Act of 1974 (ERISA). Purcell also asserted a state claim of self-compelled defamation. The district court granted the Bank judgment as a matter of law on the defamation claim, and the jury found for Purcell on the ADEA claim. The Bank timely appealed the judgment against it, and Purcell has cross-appealed the judgment on the defamation claim.

After a thorough review of the record, we affirm the judgment that the Bank discharged In 1984, Seguin State Bank and Trust Company (the Bank) hired Walter P. Purcell to help create and to manage a trust department. Purcell was 55 years old when he was hired. Purcell had worked previously in the Estate and Gift Tax Division of the Internal Revenue Service for sixteen years. In early 1989, however, the Bank hired a 37-year-old replacement for Purcell, citing Purcell's poor management techniques and technical deficiencies. Despite some conversation about the possibility of a marketing position for him, Purcell left the bank.

                Purcell because of his age.   We also affirm the district court's judgment for defendant on the defamation claim and its award of attorney's fees.   We reverse and remand for new trial the finding of willfulness, necessarily reversing the award of liquidated damages.   Finally, we remand the award of compensatory damages for remittitur or for a new trial on damages only
                

Joe Bruns, president of the Bank, had thought Purcell was 56 when he was hired. Purcell was thus ineligible to participate in the Bank's retirement program because employees at that time had to work ten years before vesting, which had to occur by the time an employee reached 65. Bruns subsequently learned that Purcell had been 55 when he was hired and informed him of his eligibility for the retirement program.

Problems arose during Purcell's years in the trust department. First, Bruns repeatedly counseled Purcell about improving his marketing efforts. Second, monthly computer reports prepared by Purcell's secretary sometimes contained mistakes and miscategorization of assets. Purcell claimed these errors resulted from his secretary's inability to understand and manipulate the accounting software the department was using. The Bank worried, on the other hand, that Purcell did not fully grasp substantive trust accounting procedures. Third, Purcell incorrectly advised the Bank that it did not need to comply with a particular tax code provision. Fourth, the trust department realized net profit for the first time in 1988. The Bank noted, however, that Purcell arrived at the profit figure by collecting fees in 1988 for work not performed until 1989. Fifth, clerical employees in the trust department complained of Purcell's poor management and requested transfers. The Bank's officers thus became concerned that Purcell was mismanaging trust assets and subjecting the bank to serious potential liability.

The Bank also faced changes in its retirement plan. These changes had been mandated by the 1986 amendments to ERISA and were to go into effect on November 1, 1989. One amendment shortened the vesting period from ten years to five, allowing Purcell's retirement benefits to vest while he was between the ages of 60 and 65.

In late 1988, Bruns consulted an employment law attorney for advice regarding the situation with Purcell. He also advertised anonymously for applicants to replace Purcell and interviewed Mike Barrow in January 1989. Barrow was then in his thirties. The Bank hired Barrow as trust department manager on January 19, 1989. Bruns, however, did not inform Purcell that he was being replaced until February 3, three days before Barrow was to begin working. At that meeting, Bruns first told Purcell he was being replaced because of poor management and technical deficiencies. Bruns then told Purcell that if Purcell would maintain a positive attitude, cure his technical deficiencies, and help train Barrow, the Bank would pay him three months' salary. At the end of that indefinite period of time, Bruns said, he would evaluate Purcell and possibly create a marketing position for him at a substantially reduced salary.

In the days following Purcell's replacement, Bruns told Purcell that he had not been fired and that the officers wanted Purcell to return to the Bank to concentrate on sales. By February 23, however, Purcell notified the Bank that he had no intention of continuing to work there. Purcell then practiced law in Seguin for about one year, moved to Galveston where his son was attending school, and worked most recently as a substitute school crossing guard.

Purcell's case was tried before a jury in March 1992. After Purcell rested, the Bank moved for Judgment as a Matter of Law under Federal Rule of Civil Procedure 50(a).

                The district court granted judgment for the Bank on the self-compelled defamation claim, which was based upon Purcell's assertion that he was forced to defame himself by telling prospective employers why he left his position with the Bank.   The court then sent the ADEA claim to the jury for decision.   The jury reached a verdict, finding that
                

1. Purcell was discharged;

2. age was a "determining" factor in Purcell's discharge;

3. the Bank's actions were willful; and

4. Purcell had sustained damages in the amount of $250,000.

The Bank filed a Motion for Judgment as a Matter of Law, a Motion for New Trial, and a Motion for Remittitur and Denial of Liquidated Damages. The district court denied all motions and entered final judgment, awarding Purcell $250,000 compensatory damages; $250,000 liquidated damages for willfulness; reinstatement; $75,000 in attorney's fees; and post-judgment interest. The Bank timely appealed, and Purcell cross-appealed the district court's judgment on the self-compelled defamation claim. Pending appeal, the Bank filed a supersedeas bond with the court, which stayed all facets of the judgment, including reinstatement.

ERISA Claim

Purcell offers as support for his ADEA claim evidence that the Bank discharged him to prevent him from vesting in his pension benefits. Vesting in the Bank's pension program, however, was triggered by years of service instead of by reaching a certain age. Because Purcell's vesting was not age-based, any interference with his pension benefits may have been actionable under ERISA, but not under the ADEA. Hazen Paper Co. v. Biggins, --- U.S. ----, ----, 113 S.Ct. 1701, 1707-08, 123 L.Ed.2d 338 (1993). There is "no disparate treatment under the ADEA when the factor motivating the employer is some feature other than the employee's age." Id. at ----, 113 S.Ct. at 1705.

Purcell pleaded that the Bank had violated ERISA by discharging him so that he would not vest in the retirement program. He presented evidence at trial to support this contention. He failed, however, to request that the jury make a finding about whether the Bank violated ERISA. Only the ADEA and defamation claims were presented to the jury. Under Federal Rule of Civil Procedure 49(a), Purcell waived his right to a trial by jury on the claim that the Bank violated ERISA. In re Letterman Bros. Energy Sec. Litig., 799 F.2d 967, 976 (5th Cir.1986). Rule 49(a) authorizes the court to make a finding on omitted issues, but here the district court made no mention of the ERISA claim in its judgment. Consequently, "it shall be deemed to have made a finding in accord with the judgment on the special verdict." Because the ERISA and ADEA claims are separate, there is no court finding on the ERISA claim. See, e.g., MBank Forth Worth, N.A. v. Trans Meridian, Inc., 820 F.2d 716, 723-24 (5th Cir.1987) (finding waiver of plaintiff's RICO counterclaim). We do not consider it.

ADEA Claim

The ADEA makes it unlawful for employers "to discharge any individual or otherwise discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's age." 29 U.S.C. § 623(a). To succeed on his claim, Purcell had to prove both that he was discharged and that his age had "a determinative influence on the outcome." Hazen Paper Co. v. Biggins, --- U.S. ----, ----, 113 S.Ct. 1701, 1706, 123 L.Ed.2d 338 (1993). Congress additionally created a "two-tiered liability scheme" in the ADEA by providing that "some but not all ADEA violations would give rise to liquidated damages." Id. at ----, 113 S.Ct. at 1709. Section 7(b) of the ADEA provides for liquidated damages in the event of a willful violation. 29 U.S.C. § 626(b). A defendant has acted willfully when it knows or shows reckless disregard for whether its conduct violated the ADEA. Biggins, --- U.S. at ----, 113 S.Ct. at 1710. But a willful violation does not necessarily occur just because the employer knew that the ADEA was "in the picture." When an employer believes in good faith that its decision is permissible under the ADEA, then liquidated damages The jury found that the Bank willfully...