Schuster v. Lucent Technologies, Inc.

• Decision Date: 28 April 2003
• Docket Number: No. 01-3974.,01-3974.
• Citation: 327 F.3d 569
• Parties: Paul SCHUSTER, Plaintiff-Appellant, v. LUCENT TECHNOLOGIES, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

327 F.3d 569

Paul SCHUSTER, Plaintiff-Appellant, v. LUCENT TECHNOLOGIES, INC., Defendant-Appellee.

No. 01-3974.

United States Court of Appeals, Seventh Circuit.

Argued January 13, 2003.

Decided April 28, 2003.

COPYRIGHT MATERIAL OMITTED

Michael R. Fox (argued), Fox & Fox, Madison, WI, Michael Rachlis, Rachlis & Pick, Chicago, IL, for Plaintiff-Appellant.

Charles C. Jackson (argued), Seyfarth Shaw, Chicago, IL, for Defendant-Appellee.

Before POSNER, KANNE, and DIANE P. WOOD, Circuit Judges.

KANNE, Circuit Judge.

Paul Schuster brought this suit claiming that his employment with Lucent Technologies, Inc. ("Lucent") was terminated because of his age in violation of the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. § 621 et seq. (2003). Lucent denied age was the motivation for the discharge, stating that Schuster was terminated as part of an effort to address adverse financial conditions and to eliminate overlapping management positions. Lucent moved for summary judgment, contending that Schuster had not raised an issue of material fact that Lucent's proffered reasons for his discharge were only a pretext for age discrimination. The district court granted summary judgment in favor of Lucent, and Schuster now appeals.

I. HISTORY

Paul Schuster, born August 11, 1943, had been an employee of Lucent and its predecessor company, AT & T Bell Labs, since 1967. During his thirty-three years with the company, Schuster held various positions in hardware and software development. In 1997, Schuster teamed up with fellow employees Jim Weichel (born February 2, 1948) and Dan Fyock (born December 19, 1948) to help form Visual Insights, a unit within Lucent's New Ventures Group. Their goal was to create a viable business entity to manufacture, sell, and distribute data visualization technology, eventually spinning off from Lucent to stand as its own company. The data visualization technology they were developing was the creation of inventor Steve Eick (born December 12, 1957).

In December 1997, Lucent hired Douglas Cogswell (born October 15, 1955) as the Chief Executive Officer of Visual Insights, charging him with the task of turning Visual Insights into a profitable, self-sustaining business entity. Cogswell stated during his deposition testimony that his goal was to create an atmosphere that "was faster moving, was more amenable to a very rapidly changing marketplace, had a lower risk profile, and ... was quick in decision making." Another senior manager gave testimony describing Cogswell's efforts as an attempt to create "a fastpaced, agile dynamic dot.com environment."

After Cogswell came on board, he put together a management team. Weichel became the Chief Operating Officer; Michael Tatelman (born November 12, 1956) was named Vice President of Marketing and Business Development; and Patricia O'Donnell (born July 3, 1956) was designated Vice President of Sales and Service. These three management positions reported directly to Cogswell. Schuster held the title of Vice President of Product Development, reporting to Weichel. Two management positions reporting to Schuster were also filled: Susan Burkwald (born September 26, 1961) as Project Manager and Martin Biernat (born December 2, 1958) as Director of Software Development. As Vice President for Product Development, Schuster's responsibilities included determining which products would be developed, allocating resources among the various production projects, and managing the production processes for Visual Insights's products.

In the fall of 1998, Cogswell and the senior management began a search to obtain the outside capital necessary to spin off Visual Insights from Lucent, but by April 1999, they had been unable to secure this funding. Lucent, which was still supporting Visual Insights at this time, was unhappy with the company's high expense rate and below-target revenues. The high expense rate and low revenues also made Visual Insights an unattractive choice for potential investors. In an effort to reduce expenses, increase efficiency, and attract outside investors, Cogswell resolved to undertake significant, cost-saving changes in the venture's operations. This included reducing the overall size of Visual Insights by approximately twenty employees, eliminating positions that were not absolutely critical and looking for programs and staff groups where there was inefficient layering. In May 1999, Visual Insights implemented a reduction-in-force ("RIF"), eliminating the positions of fifteen employees. Later, during the summer of 1999, when further savings were required, senior management determined an additional RIF was necessary.

The second RIF was part of a larger plan to restructure the research and development area of Visual Insights, developed by Cogswell with the input of other members of the company's senior leadership, including Weichel, Tatelman, and O'Donnell. Under this restructuring plan, one executive position, one developer, and one service manager would be eliminated. The three product-development-manager positions held by Schuster, Burkwald, and Biernat would be consolidated into one lower-level position. Lucent initially portrayed this as a choice of whether to retain Schuster or Eick in this consolidated capacity (as it turned out, Bill Hammond, born June 15, 1959, eventually filled this lower-level position, while Eick became a management-level Vice President). Comparing Schuster, as the manager of product development, with Eick, who actually invented the software at the core of Visual Insights's business, the management team determined that retaining Eick was more integral to the success of the venture. While acknowledging that Schuster was a valuable member of the management team, Cogswell and the senior leadership decided that it made better financial and strategic sense to retain Eick. On September 20, 1999, Schuster was notified that his position would be terminated as part of the second RIF, effective October 19, 1999.¹

In November 1999, Visual Insights obtained the outside funding it had been seeking and was able to spin off from Lucent. Cogswell became CEO and President of the new Visual Insights, Inc., Weichel the Chief Operating Officer, Tatelman the Vice President of Marketing and Business, and O'Donnell the Senior Vice President of Sales. Eick was given a management-level position as the Chief Technical Officer and Vice President of Research and Development. Schuster's former responsibilities were absorbed by Eick as well as a new lower-level management position: Executive Director of Product Development, a position filled by Hammond.

Schuster's employment at Lucent ended on October 19, 1999, and he filed this lawsuit on August 24, 2000, alleging that his termination was motivated by age discrimination in violation of the ADEA. Lucent moved for summary judgment on the issues of both liability and damages, arguing that Schuster could not show that Lucent's proffered reasons for the termination were a pretextual cover for age discrimination. On October 12, 2001, the district court granted summary judgment in favor of Lucent on the issue of liability. We now affirm.

II. ANALYSIS

We review a grant of summary judgment de novo, viewing all the facts and taking all inferences from those facts in a light most favorable to the nonmoving party. Krchnavy v. Limagrain Genetics Corp., 294 F.3d 871, 875 (7th Cir.2002). Summary judgment is proper when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." FED. R. CIV. P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A genuine issue of material fact exists "only if there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." Wade v. Lerner New York, Inc., 243 F.3d 319, 321 (7th Cir.2001) (quotation omitted).

The ADEA prohibits an employer from "discharg[ing] any individual ... because of such individual's age." 29 U.S.C. § 623(a)(1) (2003). To establish a claim under the ADEA, a plaintiff-employee must show that "the protected trait (under the ADEA, age) actually motivated the employer's decision" — that is, the employee's protected trait must have "actually played a role in [the employer's decision-making] process and had a determinative influence on the outcome." Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 141, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000) (quoting Hazen Paper Co. v. Biggins, 507 U.S. 604, 610, 113 S.Ct. 1701, 123 L.Ed.2d 338 (1993)). Such a claim may be proven through direct evidence of the employer's discriminatory motive, or through the indirect, burden-shifting approach articulated by the Supreme Court in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973).² Lacking any direct evidence of age animus on Lucent's part, Schuster here relies on the indirect method.

Under the McDonnell Douglas approach, a plaintiff-employee must first establish a prima facie case of discrimination. Id. This requires proof of four elements: (1) the employee is a member of the protected class (in an ADEA case, employees over 40 years of age, see 29 U.S.C. § 631(a)); (2) the employee was performing at a satisfactory level; (3) the employee was subject to an adverse employment action; and (4) the employee was treated less favorably than younger, similarly situated employees. Krchnavy, 294 F.3d at 875. If the plaintiff succeeds in making out a prima facie case, the burden then shifts to the employer to articulate some legitimate, nondiscriminatory reason for the adverse employment action. McDonnell Douglas, 411 U.S. at 802, 93 S.Ct. 1817. If such a reason is offered, "the plaintiff ... bears the ultimate burden of showing that it is a pretext...