Salus v. GTE Directories Service Corp.

• Decision Date: 10 January 1997
• Docket Number: No. 96-1744,96-1744
• Citation: 104 F.3d 131
• Parties: William M. SALUS, Plaintiff-Appellee, v. GTE DIRECTORIES SERVICE CORP., Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 131

104 F.3d 131

William M. SALUS, Plaintiff-Appellee, v. GTE DIRECTORIES SERVICE CORP., Defendant-Appellant.

No. 96-1744.

United States Court of Appeals Seventh Circuit.

Argued Nov. 7, 1996.

Decided Jan. 10, 1997.

Courtney Cox (argued), Hart & Hart, Benton, IL, for plaintiff-appellee.

Peter R. Bulmer (argued), Malory N. Harriman, Jackson, Lewis, Schnitzler & Krupman, Chicago, IL, Sandra G. Parker, GTE Directories Corp., Dallas, TX, for defendant-appellant.

Before FLAUM, DIANE P. WOOD, and EVANS, Circuit Judges.

FLAUM, Circuit Judge.

The district court, after a bench trial, entered judgment in favor of William M. Salus under section 510 of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. § 1001 et seq. The district court found that GTE terminated Salus in order to interfere with rights protected by ERISA. The district court also held that Salus was not required to pursue possible remedies under the GTE Short-Term Disability Plan ("STD Plan"), as pursuit of these administrative remedies would have been futile. GTE appeals the district court's decision on three grounds: (1) the district court's finding that GTE's articulated reason for firing Salus was pretextual was clearly erroneous; (2) the district court's finding that Salus was terminated with the specific intent to interfere with his short-term disability benefits was clearly erroneous; and (3) the district court abused its discretion by not requiring Salus to exhaust his remedies under the STD Plan. We conclude that the district court's factual findings underlying its determination that GTE was liable under section 510 are not clearly erroneous and that the district court's decision not to require exhaustion was a proper exercise of the court's discretion. We therefore affirm the judgment of the district court.

I.

Salus sold advertising space in GTE's yellow pages from January of 1992, when he was hired as a Premise Sales Representative in GTE's Marion, Illinois sales office, until his employment was terminated in June of 1992. Salus' direct supervisor at GTE was Mel Fowler, the District Sales Manager responsible for the Marion office. The relationship between Salus and his supervisor, Fowler, was less than amicable. Salus testified that he was subject to almost daily threats of termination and general verbal abuse. By June of 1992, Salus' relationship with Fowler had deteriorated to the point that Salus began having nightmares about his job and was under such pressure at work that he felt as if he were "operating on pure guts and nerves." The relationship deteriorated because, according to Salus, Fowler was jealous of the commissions Salus was earning and because the two had a dispute regarding responsibility for a customer billing error that occurred in May of 1992.

As a result of this job-related stress, Salus began having painful headaches. These headaches became so unbearable that, on Monday June 15th, Salus had a friend call Fowler to inform him that he would not be reporting for work. As a result of these headaches, Salus did not return to work for the rest of that week. Fowler fired Salus the following Monday. The events surrounding Salus' termination are in dispute. GTE alleges that Salus was fired because he failed to report to work or to call in for three consecutive days, whereas Salus maintains that Fowler was aware of his condition and that he was terminated in order to interfere with his right to short-term disability benefits.

It is undisputed that on Monday, the first day of Salus' absence, Fowler came to Salus' apartment to inquire as to his condition, and that Salus informed him that he had an appointment to see a doctor the next day and would therefore not be at work. The following day, Salus visited Dr. Oestmann, who diagnosed Salus as suffering from severe job-related stress. Dr. Oestmann instructed Salus not to return to work until he could see a psychiatrist and made Salus an appointment for the following Tuesday. Salus therefore requested that Dr. Oestmann call Fowler to advise him that he would not be at work until at least the following week.

Dr. Oestmann called GTE's Marion office the following day, Wednesday June 17th. The parties dispute whether Dr. Oestmann in fact spoke with Fowler. Dr. Oestmann testified that a male voice answered the phone and that he requested to speak with Fowler. After a pause, a male voice came on the line. Without waiting for the speaker to identify himself, Dr. Oestmann told the speaker that Salus was under his care and that Salus would not be returning to work until Salus could see a psychiatrist. The unidentified speaker responded, "Okay." Dr. Oestmann assumed that he had spoken with Fowler. Fowler, however, denies having this conversation. It is GTE's contention that the call must have been received by the "Message Center," the third-party, telephone answering service that covered GTE's phones. If no one was in the office, a Message Center employee would answer the phone with the greeting "GTE" or "GTE Yellow Pages" and would not indicate that the call was being answered by a message service. However, the only male employee working that day testified that he did not recall taking a message from Dr. Oestmann. Fowler and Dr. Oestmann also spoke briefly later that same day as the result of a phone call initiated by Fowler. Both described this conversation as confused, as neither appeared to recognize the other's name at the time and neither identified his relationship to Salus. They both decided that there had been a mix-up and terminated the call. GTE contends that Fowler was returning Dr. Oestmann's call in response to the message he allegedly received from the Message Center.

As ordered by Dr. Oestmann, Salus did not return to work. On Monday June 22nd, Fowler and another GTE employee went to Salus' apartment in the evening and informed Salus that he was fired and asked him to return his office keys, company car, and any other property belonging to GTE. Fowler did not give Salus a reason for his termination. GTE maintains that Salus was terminated pursuant to its long-standing, unwritten "job-abandonment" policy. According to GTE, under this policy, an employee who does not report for work for three consecutive days without calling the office is considered to have abandoned his or her job and is fired.

The district court found that Dr. Oestmann had spoken to Fowler and that Fowler was therefore aware of Salus' need to remain off of work until at least the following week and that GTE's assertion of a job-abandonment policy as the basis for firing Salus was merely a pretext. The court also found that Fowler was aware that Salus' right to short-term disability benefits would end upon termination and that Fowler terminated Salus with the specific intent to interfere with his short-term disability benefits.

II.

We first address GTE's claim that certain factual findings and conclusions made by the district court are clearly erroneous. Section 510 of ERISA provides, in pertinent part:

It shall be unlawful for any person to discharge, fine, suspend, expel, discipline, or discriminate against a participant or beneficiary for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan....

29 U.S.C. § 1140. In order to recover under section 510, an employee must show that the employer terminated him with the specific intent to interfere with his ERISA rights. See Teumer v. General Motors Corp., 34 F.3d 542, 550 (7th Cir.1994); Meredith v. Navistar Int'l Transp. Co., 935 F.2d 124, 126 (7th Cir.1991). Plaintiff may satisfy this burden by either presenting direct evidence of interference with his protected benefits or by utilizing the burden-shifting analysis of McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973). See Grottkau v. Sky Climber, Inc., 79 F.3d 70, 73 (7th Cir.1996); Little v. Cox's Supermarkets, 71 F.3d 637, 642 (7th Cir.1995); Clark v. Coats & Clark, Inc., 990 F.2d 1217, 1223 (11th Cir.1993); Meredith, 935 F.2d at 127. Salus relied upon the burden-shifting approach. In the section 510 context, this approach requires that a plaintiff establish a prima facie case of interference by demonstrating that he (1) belongs to the protected class; (2) was qualified for his job position; and (3) was discharged or denied employment under circumstances that provide some basis for believing that the prohibited intent to retaliate was present. See Grottkau, 79 F.3d at 73; Little, 71 F.3d at 642. Once the plaintiff establishes a prima facie case of interference, the burden shifts to the defendant to offer a legitimate, non-discriminatory reason for the challenged employment action. See id. If the defendant presents a legitimate reason, the burden then shifts back to the plaintiff to demonstrate that the proffered explanation is pretextual and that the "motivating factor behind the termination" was the specific intent to interfere with the plaintiff's ERISA rights. See Meredith, 935 F.2d at 127.

The district court found that Salus had established a prima facie case of interference with his short-term disability benefits. GTE does not challenge this determination. The court also found that GTE proffered a legitimate, nondiscriminatory reason for Salus' discharge, namely its job-abandonment policy. The court therefore shifted the burden to Salus to prove that the job-abandonment policy was a pretext and that he was terminated with the specific intent to interfere with his right to short-term disability benefits. GTE argues that the district court's findings that Salus satisfied his burden of proving GTE's proffered explanation for terminating him was pretextual and that he was terminated with the specific intent to interfere with his Plan benefits were clearly erroneous. We address each of these arguments in turn.

A.

The district court based its determination that GTE's...