Schuhmacher v. North Dakota Hosp. Ass'n

• Citation: 528 N.W.2d 374
• Decision Date: 20 March 1995
• Docket Number: No. D,No. 940155,D,940155
• Parties: 77 Fair Empl.Prac.Cas. (BNA) 1603 Alan J. SCHUHMACHER and Dale G. Wavra, Plaintiffs and Appellees v. NORTH DAKOTA HOSPITAL ASSOCIATION,ak. Health Service, Advantage Healthcare Net, Inc., and Hospital Services, Inc., Defendants and Appellants Civ.
• Court: North Dakota Supreme Court

Page 374

528 N.W.2d 374

77 Fair Empl.Prac.Cas. (BNA) 1603

Alan J. SCHUHMACHER and Dale G. Wavra, Plaintiffs and Appellees v. NORTH DAKOTA HOSPITAL ASSOCIATION, No. Dak. Health Service,

Advantage Healthcare Net, Inc., and Hospital

Services, Inc., Defendants and Appellants

Civ. No. 940155.

Supreme Court of North Dakota.

March 20, 1995.

James A. Jones, Sprenger and Lang, Minneapolis, MN, for plaintiffs and appellees. Appearance by Michael F. Daley, McConn, Fisher, Olson & Daley, Grand Forks.

Paul J. Zech, Felhaber, Larson, Fenlon & Vogt, Minneapolis, MN, for defendants and appellants. Appearance by Douglas R. Herman, Vogel, Brantner, Kelly, Knutson, Weir & Bye, Ltd., Fargo.

VANDE WALLE, Chief Justice.

The North Dakota Hospital Association [NDHA or the Association] appealed from a judgment upon a jury verdict of the district court, Northeast Central Judicial District, finding that it had engaged in unlawful age discrimination and from denials of its motions for judgment notwithstanding the verdict, new trial, remittitur, and reconsideration of the award of attorneys' fees. Because the jury instructions did not adequately inform the jury of the applicable law and relevant evidence necessary to the defense was erroneously excluded, we reverse and remand for a new trial.

NDHA is a nonprofit association of hospitals and clinics which was organized, in part, for the purpose of making it more economical for its member institutions to purchase supplies and to collect outstanding debts. The Association is mostly funded by the annual dues from its member institutions. During the time relevant to this action, NDHA contained two for-profit subsidiaries. These were a group purchasing agency, known as Advantage, and Hospital Services Incorporated [HSI], a collection agency. Alan J. Schuhmacher was hired on September 8, 1974, to be Director of Purchasing for the corporation which eventually became known as Advantage. He later received the title of Vice President, North Dakota Health Services, Advantage Healthcare Net, Inc. He was discharged from this position on February 21, 1989. At that time he was 54 years old. Dale G. Wavra was hired on April 15, 1981, to do collections for HSI. He was 58 years old when he was discharged from the position of Vice President of HSI on February 21, 1989. Arnold "Chip" Thomas, who became the Chief Executive Officer of NDHA on January 1, 1989, made the decision to fire both Wavra and Schuhmacher. He testified at trial that the decision was necessitated by his perception that NDHA faced a financial crisis. No other NDHA employees were discharged at this time.

According to evidence at trial, when Schuhmacher was discharged, his duties were distributed among the existing sales staff at Advantage. By October of 1989, one of those staff people, Wade Johnson, was given the title of Vice President, Chief Operating Officer of Advantage. At that time, Johnson was within one month of his thirty-ninth birthday. After Wavra was discharged, HSI was moved from Grand Forks to Bismarck. In May of 1989, Kimberly Rau was hired to be "head collector" or "director" to oversee the opening of the Bismarck operation. In January of 1991, she was given the title of Vice President. At the time of trial, Rau was thirty-two years old.

Wavra and Schuhmacher sued NDHA under the North Dakota Human Rights Act, NDCC ch. 14-02.4, claiming age discrimination. They alleged that Thomas had not sufficiently evaluated his employees before deciding which ones to keep and that, therefore, he must have discharged Wavra and Schuhmacher because of their ages under the assumption that discharging older employees would save more money than would discharging younger employees. A jury found for both Wavra and Schuhmacher and awarded a total of $730,000 in damages. The trial court's award of costs and attorneys' fees brought the total judgment against NDHA to over one million dollars. NDHA's appeal of the judgment challenges the sufficiency of the evidence, the jury instructions, evidentiary rulings, and the amount of damages and attorneys' fees. Because we reverse based on a combination of errors in the jury instructions and evidentiary rulings, we do not address the other issues raised by Appellants.

The Association asserts that Wavra and Schuhmacher were discharged when their positions were eliminated for legitimate business reasons. It argues that the trial court improperly equated salary-status decision making with age-based decision making. The Association also argues that Wavra and Schuhmacher failed to demonstrate that they were replaced after their discharge and therefore failed to establish all of the elements of an age-discrimination claim. The motion for new trial specifically alleged errors in law and evidence during the trial.

Our review of a denial of a motion for a new trial is limited to those issues raised on the motion before the trial court. Andrews v. O'Hearn, 387 N.W.2d 716 (N.D.1986). Errors of law occurring at trial and timely excepted to by the applying party may be grounds for a grant of a new trial. Id. N.D.R.Civ.P. 59(b)7.

"Jury instructions must fairly inform the jury of the applicable law.... On appeal, we review jury instructions as a whole.... If taken as a whole they correctly advise the jury of the law, we will not reverse a jury decision on the basis of particular insufficient or erroneous parts of the instructions.... Thus, we review the adequacy of the entire instruction given and we do not dwell on the merits of instructions requested by counsel but not given by the trial court."

Beilke v. Coryell, 524 N.W.2d 607, 609 (N.D.1994) [citations omitted].

We also inquire whether within the context of the complete jury instructions, specific instructions would likely confuse or mislead the average jury. Id. Jury instructions that erroneously inform the jury of the law which must be applied to the specific facts at issue may constitute reversible error. Meshefski v. Shirnan Corp., 385 N.W.2d 474 (N.D.1986).

Under the North Dakota Human Rights Act, it is illegal discrimination for "an employer to ... discharge an employee ... because of ... age." NDCC § 14-02.4-03 (Supp.1993). Employees who suffer discrimination may bring suit against offending employers and obtain equitable relief or awards for damages. Id. §§ 14-02.4-19, 20, 21.

In Schweigert v. Provident Life Ins. Co., 503 N.W.2d 225 (N.D.1993), a majority of this court adopted a modified version of federal procedural law to assist plaintiffs relying on indirect evidence to prove employment discrimination claims under the Human Rights Act. See also Nicholas W. Chase, Comment, Civil Rights--Employment Discrimination: Modifying Federal Standards to Reflect Principles of State Law: The North Dakota Supreme Court's Examination of the Hicks Rationale Prompts the Court to Customize Its Own Standard to Review State-based Employment Discrimination Claims, 70 N.D.L.Rev. 207 (1994). After Schweigert, once a plaintiff proves by a preponderance of the evidence a prima facie case of employment discrimination, the burden shifts to the defendant to prove by a preponderance of the evidence that the challenged "action was motivated by one or more legitimate, nondiscriminatory reasons." Schweigert, 503 N.W.2d at 229.

Although the Schweigert majority did not specifically delineate the elements of a prima facie case of employment discrimination, it cited to federal cases for illustration. Id. at 227 n. 2. Federal courts vary in their descriptions of the requirements for a prima facie case of unlawful discrimination in employment. The elements of the prima facie case are usually: the plaintiff is a member of the protected class (in this case, age); plaintiff suffered an adverse employment decision; plaintiff's work performance was satisfactory; and plaintiff was replaced. See id; McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973). See also Hummel v. Mid Dakota Clinic, P.C., 526 N.W.2d 704, 709 (N.D.1995) ["In Schweigert ... we said that to establish a prima facie case of discriminatory discharge under the Act, one of the four factors a plaintiff must show is that the plaintiff was satisfactorily performing the duties of his position."]. The fourth element of the prima facie case, involving whether the discharged employee was replaced, is the source of much controversy among the courts and has been phrased in vastly divergent ways. Some courts express it in terms of whether the plaintiff's responsibilities were assumed by another employee in such a manner as to demonstrate that the employer had a continuing need for the plaintiff's particular skills. E.g., Keisling v. SER-Jobs for Progress, Inc., 19 F.3d 755 (1st Cir.1994). Other courts avoid the replacement terminology and merely require a showing that the plaintiff was treated less favorably than other employees, not in the protected class. E.g., Rea v. Martin Marietta Corp., 29 F.3d 1450 (10th Cir.1994). The Eleventh Circuit Court of Appeals has stated the fourth element differently altogether. Alphin v. Sears, Roebuck & Co., 940 F.2d 1497 (11th Cir.1991). That court requires the plaintiff to provide "evidence by which a fact finder might reasonably conclude that the employer intended to discriminate on the basis of age in reaching the decision at issue." Id. at 1501.

Certainly, focusing on whether a plaintiff was replaced would be inappropriate in a case involving a reduction in force in which the plaintiff's position is eliminated. An employer could make all of its firing decisions based purely on age and take no action to replace those fired, yet the employer's actions would clearly be age discrimination under the Human Rights Act. See NDCC § 14-02.4-03 (Supp.1993) [including among the list of "discriminatory practices" the discharge of an employee because of age]. Thus, the formula that the Schweigert majority adopted as "a helpful guide to allocate the order of...