Simpson v. Midland-Ross Corp.

Decision Date09 September 1987
Docket Number85-1676,Nos. 85-1381,MIDLAND-ROSS,s. 85-1381
Citation823 F.2d 937
Parties44 Fair Empl.Prac.Cas. 418, 43 Empl. Prac. Dec. P 37,234, 45 Empl. Prac. Dec. P 37,658 Frederick C. SIMPSON, Plaintiff-Appellee, Cross-Appellant, v.CORPORATION, Defendant-Appellant, Cross-Appellee.
CourtU.S. Court of Appeals — Sixth Circuit

Wallace K. Sagendorph, argued, Troy, Mich., for defendant-appellant, cross-appellee.

Rudy J. Huizenga, argued, Beth M. Rivers, Detroit, Mich., for plaintiff-appellee, cross-appellant.

Before ENGEL, KRUPANSKY and RYAN, Circuit Judges.

ENGEL, Circuit Judge.

Appellant Midland-Ross appeals a district court judgment entered upon a jury verdict in favor of its former employee, Frederick Simpson. Simpson's complaint charged that he was unlawfully discharged in violation of the Michigan Elliott-Larsen Act, Mich.Comp.Laws Ann. Sec. 37.2101 et seq., and the federal Age Discrimination in Employment Act (ADEA), 29 U.S.C. Sec. 621 et seq.

Midland-Ross asserts that Simpson failed to make out a prima facie case of age discrimination, and that the district court erred in denying its motion for directed verdict and judgment notwithstanding the verdict. Midland-Ross also raises numerous other questions concerning jury instructions and damages. Simpson cross-appeals the denial of his request for prejudgment interest, and Midland-Ross challenges the timeliness of that cross-appeal. Because we conclude that the trial court erred in denying Midland-Ross' motion for judgment notwithstanding the verdict, we do not reach the other issues raised. 1

I.

Midland-Ross hired plaintiff-appellee Simpson on January 7, 1974 at age 48, as a sales account manager in the original equipment manufacturing division (OEM) of the marketing department at Midland-Ross' brake division of Owosso, Michigan. Simpson had primary responsibility for the Ford Motor Company account, and later was given responsibility for the Chrysler and Nelson Metals diecasting division accounts. Simpson apparently performed satisfactorily and received adequate reviews despite negative scores and comments on certain aspects of his performance, including problem solving, lack of aggressiveness, and a lack of persistence in pursuing difficult accounts. His last two performance reviews were more negative than previous reviews, but did not indicate that he would be terminated. Simpson was terminated in August 1980 after receiving approximately one month's notice. Midland-Ross explained that it laid off Simpson as part of a general reduction in force of the least productive employees based on their relative abilities to penetrate designated product markets. Midland-Ross conceded that the Ford Motor Company account was particularly difficult and that Simpson had been given considerable latitude in obtaining Ford's business. Simpson alleged that his full performance was not evaluated because his supervisors did not take into account his work on Nelson Metals.

Simpson also claimed that he was replaced by a 39-year old who did not perform as well as he had, although the record clearly shows that Simpson's "replacement" did not assume Simpson's former responsibilities until several months after Simpson's termination. Simpson's former supervisor attempted to handle the accounts for approximately three months until October 1980, and then assigned the accounts to the "replacement" whose workload was subsequently transferred to someone else. Both sides offered considerable evidence concerning Simpson's work history and the history of other employees. Most of the evidence offered was neither contradicted nor challenged, but was subject to various interpretations regarding plaintiff's ultimate qualifications as compared to other employees. Simpson offered no direct evidence of age discrimination and, apart from evidence concerning job qualifications and performance, merely introduced statistics regarding decreasing employee age and the average age of persons hired and retained during the relevant period.

Simpson brought suit on September 27, 1983 in Michigan state court, alleging violations of both Michigan's Elliott-Larsen Act and the federal Age Discrimination in Employment Act. Midland-Ross removed the case to federal court on diversity grounds. A jury found that Midland-Ross had willfully violated both the Elliott-Larsen Act and the ADEA, and awarded Simpson $166,007. Simpson moved to amend the judgment to include liquidated damages, interest, costs and attorneys' fees, while Midland-Ross sought judgment notwithstanding the verdict (JNOV), new trial, or remittitur. The court awarded Simpson $84,000 in liquidated damages but denied Simpson's other motions; the court also denied Midland-Ross' motions.

II.

Traditionally, a plaintiff who alleges unlawful employment discrimination raises a presumption of such discrimination by satisfying the four criteria of McDonnell Douglas v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973). If McDonnell Douglas applies literally to an ADEA claim, a plaintiff must demonstrate as a threshold matter:

(1) he was a member of a protected class (age 40 to 70);

(2) he was subjected to adverse employment action;

(3) he was qualified for the position;

(4) he was replaced by a younger person.

See, e.g., Wilkins v. Eaton Corp., 790 F.2d 515, 520 (6th Cir.1986). A plaintiff may also show through circumstantial, statistical, or direct evidence that he has been discriminated against. Blackwell v. Sun Electric Corp., 696 F.2d 1176, 1180 (6th Cir.1983). For analytical purposes, Michigan's Elliott-Larsen Act resembles federal law, and the same evidentiary burdens prevail as in ADEA cases. Gallaway v. Chrysler Corp., 105 Mich.App. 1, 306 N.W.2d 368, 370-71 (1981) (adopting Sixth Circuit analysis in Laugesen v. Anaconda Co., 510 F.2d 307 (6th Cir.1975)).

The plaintiff in McDonnell Douglas asserted that he had not been hired because of unlawful race discrimination. Although we recognize that an unlawful discharge may differ markedly from a failure to hire, the Supreme Court has invoked McDonnell Douglas criteria in both situations. Texas Dept. of Community Affairs v. Burdine, 450 U.S. 248, 101 S.Ct. 1089, 67 L.Ed.2d 207 (1981).

Proof of the four McDonnell Douglas elements or other direct or statistical proof raises a rebuttable presumption of discrimination. 2 The burden of production then shifts to the defendant employer to provide a legitimate nondiscriminatory reason for the action taken. Texas Dept. of Community Affairs v. Burdine, 450 U.S. 248, 101 S.Ct. 1089, 67 L.Ed.2d 207 (1981). Thereafter the employee must "demonstrate that the proffered reason was not the true reason for the employment decision. This burden now merges with the ultimate burden of persuading the court that [he] has been the victim of intentional discrimination." Id. at 256, 101 S.Ct. at 1095.

The Sixth Circuit and Michigan Supreme Court have refused to follow blindly the four-part McDonnell Douglas formula in ADEA cases. See Merkel v. Scovill, Inc., 787 F.2d 174 (6th Cir.1986), in which this court reversed judgment for the employees based on the failure to deny defendant's JNOV request; Sahadi v. Reynolds Chemical, 636 F.2d 1116 (6th Cir.1980), which affirmed a directed verdict for the employer; and Matras v. Amoco Oil Co., 424 Mich. 675, 385 N.W.2d 586, 589-90 (1986), in which the Michigan Supreme Court disapproved the automatic application of McDonnell Douglas. See also United States Postal Service Bd. of Governors v. Aikens, 460 U.S. 711, 715, 103 S.Ct. 1478, 1481, 75 L.Ed.2d 403 (1983) (McDonnell Douglas never intended to be rigid, mechanized, or ritualistic). We explicitly questioned the value of literal application of McDonnell Douglas to ADEA cases in Laugesen v. Anaconda Co., 510 F.2d 307, 312 (6th Cir.1975). In Laugesen we adopted a case-by-case approach, one that would allow us to remain attentive to the realities of the business world. 3

Even if we fully adopt the premise that the McDonnell Douglas factors constitute a prima facie case of impermissible discrimination based on age, 4 we note that two facts substantially weaken Simpson's initial claim: he was not replaced until several months after discharge, and the discharge occurred in the context of a reduction in force due to economic necessity. "[A]n ADEA plaintiff who has been terminated amidst a corporate reorganization carries a greater burden of supporting charges of discrimination than an employee who was not terminated for similar reasons." Ridenour v. Lawson Co., 791 F.2d 52, 57 (6th Cir.1986). Particularly where economic necessity dictates reorganization, a conclusory statement alone is not probative of age discrimination:

The mere termination of a competent employee when an employer is making cutbacks due to economic necessity is insufficient.... The plaintiff in such reorganization cases must come forward with additional direct, circumstantial, or statistical evidence that age was a factor in his termination.... [Plaintiff] has not succeeded in this regard. He has come forward with nothing, other than his subjective determination that he was better qualified than [his replacement], to indicate that age played a role in [the employer's] decision to terminate him. This is not a case where the plaintiff presented evidence that management favored younger workers, tended to fire older workers, or indicated in some manner that older workers were held in disfavor....

LaGrant v. Gulf & Western Mfg. Co., Inc., 748 F.2d 1087, 1090-91 (6th Cir.1984). Thus in cases of corporate reorganization a plaintiff must come forward with "additional direct, circumstantial, or statistical evidence that age was a factor in his termination...." Ridenour v. Lawson Co., 791 F.2d 52 (6th Cir.1986); see also Matras v. Amoco Oil Co., 424 Mich. 675, 385 N.W.2d 586, 590 (1986). Even where termination is not based on economic...

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