Shah v. General Elec. Co.

• Decision Date: 20 April 1987
• Docket Number: No. 86-5548,86-5548
• Parties: 43 Fair Empl.Prac.Cas. 1018, 43 Empl. Prac. Dec. P 37,013, 2 Indiv.Empl.Rts.Cas. 104 Kiran K. SHAH, Plaintiff-Appellant, v. GENERAL ELECTRIC COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 264

816 F.2d 264

43 Fair Empl.Prac.Cas. 1018,

43 Empl. Prac. Dec. P 37,013,

2 Indiv.Empl.Rts.Cas. 104

Kiran K. SHAH, Plaintiff-Appellant, v. GENERAL ELECTRIC COMPANY, Defendant-Appellee.

No. 86-5548.

United States Court of Appeals, Sixth Circuit.

Argued Feb. 13, 1987.

Decided April 20, 1987.

James C. Hickey, argued, Ewen, MacKenzie and Peden, Louisville, Ky., for plaintiff-appellant.

Edwin Hopson, Louisville, Ky.,for defendant-appellee.

Before MERRITT and MILBURN, Circuit Judges; and PECK, Senior Circuit Judge.

MILBURN, Circuit Judge.

Plaintiff Kiran K. Shah appeals the summary judgment for defendant General Electric Co. ("GE") in this action alleging that GE terminated plaintiffs employment because of his color and national origin in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. Sec. 2000e-2(a) ("Title VII"), and the Civil Rights Act of May 31, 1870, 42 U.S.C. Sec. 1981 ("section 1981"). Plaintiff further alleged that GE discharged him without just cause and without following the policies and procedures set forth in the company's Organization and Policy Guide and thereby breached the employment contract between plaintiff and GE. For the reasons that follow, we affirm the dismissal of plaintiff's federal claims but reverse the grant of summary judgment on the breach of contract claim.

I.

Plaintiff, a dark-skinned native of India, has been a citizen of the United States since 1975. He holds a bachelor's degree in Chemical Engineering from Bombay University in India, a Master's Degree in Chemical Engineering from Northwestern University in Evanston, Illinois, and an MBA in Marketing and Finance from the University of New Haven, Connecticut. After a short tenure teaching Strategic Planning and Marketing in the graduate program at the University of New Haven, plaintiff was employed by Uniroyal from 1964 to 1979.

In February 1980, GE offered plaintiff the "relatively high position" of Manager of Business Development and Planning for the Air Conditioning Business Division ("ACBD") at GE's Appliance Park Facility in Louisville, Kentucky. This position was the second most important position in planning at ACBD, and plaintiff's starting salary of Sixty Thousand Dollars ($60,000.00) per annum was the highest amount paid any exempt employee not on Division Staff. Plaintiff was also eligible for GE's Incentive Compensation Plan.

On discovery, plaintiff testified that during the interview process, he was shown a GE Organization and Policy Guide and that he received a copy after he began his employment. The manual contained GE's policies on "Treatment of Less than Satisfactory Performance." Plaintiff further testified that he was told that GE did not terminate its employees "without a just and sufficient cause."

Plaintiff began his employment with GE on April 1, 1980, and worked without direct supervision until June 1980, when W.T. Hewitt became his supervisor. Hewitt's assessment of plaintiff "was quite complimentary with regard to his performance, and was quite positive with regard to his promotability." Mr. Palmer, Manager of Organization and Manpower for ACBD, further deposed that there was nothing negative in plaintiff's personnel file prior to his termination.

In July 1981, plaintiff's immediate supervisor resigned, and plaintiff was appointed acting manager. On August 26, 1981, William Sharpstone was named manager and plaintiff returned to the number two position. The district court observed that, "For whatever reason, relations between Sharpstone and plaintiff were less than cordial."

Plaintiff further testified on discovery that he met Sharpstone for the first time at the airport for a trip to Tyler, Texas. Plaintiff stated that Sharpstone refused to shake hands or to speak with him during the plane ride, and that in the succeeding months, Sharpstone would not respond to his memoranda or his verbal requests for conferences. Plaintiff testified that he felt Sharpstone was isolating him from the mainstream of the department's work, and further testified that Sharpstone consistently misspelled his name.

On discovery, Sharpstone testified that plaintiff's work was unsatisfactory. First, Sharpstone felt that a speech prepared by plaintiff was unfocused, disorganized, and without any conclusion. Second, Sharpstone testified that plaintiff failed to follow his directions in preparing a model for forecasting industry trends. Third, Sharpstone felt that plaintiff's analysis of one of GE's principal competitors was disorganized and not usable for action purposes. Fourth, in Sharpstone's view, plaintiff's comments during meetings were unfocused and "off the wall."

As a result of these perceived deficiencies in plaintiff's performance, Sharpstone denied plaintiff incentive compensation for 1981. Moreover, Sharpstone decided that plaintiff's employment should be terminated. Sharpstone further testified on discovery that he made this decision prior to plaintiff's departure on an extended trip to India in November 1981 for personal reasons. However, plaintiff was not informed until January 6, 1982, shortly after he returned to the United States. Plaintiff testified that at that time Sharpstone stated that plaintiff would be replaced. Sharpstone essentially confirmed that he expected at that time to replace plaintiff.

On January 18, 1982, plaintiff was formally notified of his termination. Although the separation date was set for the end of April 1982, GE extended the separation date to June 1982, and placed plaintiff on lack of work status in order to enable plaintiff to receive more benefits and additional severance pay.

At this same time, GE decided to reduce the ACBD staff and eliminated plaintiff's position. Accordingly, no one was ever hired to replace plaintiff. There is some dispute as to whether, prior to the decision to eliminate plaintiff's position, GE interviewed individuals to replace plaintiff. GE officials deposed that there were no interviews. Plaintiff, on the other hand, testified that Sharpstone interviewed a Mr. Jaffee in the late summer of 1981, which would be approximately one year before plaintiff's termination. There is no indication in our record as to Mr. Jaffee's race.

After exhausting his administrative remedies, plaintiff filed the present action on July 1, 1983. Following discovery, GE moved for summary judgment on February 26, 1986, which the district court granted on April 14, 1986. The district court first rejected GE's argument that plaintiff's section 1981 claim was deficient because East Indians are not entitled to protection under the statute.

The district court next turned to an analysis of plaintiff's Title VII and section 1981 claims under the standards set forth in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973), and its progeny. ¹ The district court first held that although plaintiff's evidence established the first three elements of a prima facie case under McDonnell Douglas; viz., (1) that plaintiff is a member of a protected class, (2) he was discharged, and (3) he was qualified for the position, plaintiff's evidence did not establish the fourth element; i.e., that plaintiff was replaced by someone with his qualifications. The district court went on to hold that, assuming arguendo that plaintiff had established a prima facie case, GE had carried its burden of producing evidence that it terminated plaintiff for the legitimate, nondiscriminatory reason that his job performance was inadequate. However, the district court further held that plaintiff's evidence could not support a finding that the reason proffered by GE was pretextual.

The district court dismissed plaintiff's implied contract claim because, in its view, under Kentucky law, plaintiff's employment was terminable at will. Further, the district court declined to exercise pendant jurisdiction over plaintiff's claim under Kentucky's Civil Rights Act, Ky.Rev.Stat. ch. 344 (1983).

On appeal plaintiff argues (1) that the district court erred in holding that he did not establish a prima facie case because he was not replaced; (2) that the district court erred in holding that the evidence could not support a finding that GE's proffered reason for discharging him was pretextual; and (3) that the district court erred in holding that, under Kentucky law, he was an employee at will. GE argues, as a partial, alternative ground for affirming the district court, that plaintiff, as an East Indian, is not entitled to protection under section 1981.

II.

A. Prima Facie Case

In a disparate treatment case, such as the present action, the plaintiff's ultimate burden is to persuade the court that he has been the victim of intentional discrimination. See, e.g., Texas Department of Community Affairs v. Burdine, 450 U.S. 248, 256, 101 S.Ct. 1089, 1095, 67 L.Ed.2d 207 (1981); Rowe v. Cleveland Pneumatic Co., 690 F.2d 88, 92 (6th Cir.1982) (per curiam). In the absence of direct evidence, "[p]roof of discriminatory motive ... can in some situations be inferred from the mere fact of differences in treatment." International Brotherhood of Teamsters v. United States, 431 U.S. 324, 335 n. 15, 97 S.Ct. 1843, 1854 n. 15, 52 L.Ed.2d 396 (1977). See also Rowe, 690 F.2d at 92. In McDonnell Douglas, the Supreme Court established a tripartite analysis for disparate treatment claims: the plaintiff must prove a prima facie case; the defendant must offer a legitimate, nondiscriminatory reason for its actions; and the plaintiff must establish that the defendant's proffered explanation is a pretext to mask an illegal motive. 411 U.S. at 802-04, 93 S.Ct. at 1824-25.

The McDonnell Douglas Court stated that in a failure-to-hire case, the Title VII plaintiff may establish a prima facie case of racial discrimination "by showing (i) that he belongs to a racial minority; (ii) that he applied and was qualified for a job for which the employer was seeking applicants; (iii) that, despite...