Starkey v. Amber Enters., Inc.

• Decision Date: 04 February 2021
• Docket Number: No. 19-3688, No. 19-3757,19-3688
• Citation: 987 F.3d 758
• Parties: Lana L. STARKEY, Plaintiff - Appellee v. AMBER ENTERPRISES, INC., a Corporation, doing business as Amber Pharmacy, Defendant - Appellant Hy-Vee, Inc., a Corporation; Mike Agostino, Individually, Defendants Lana L. Starkey, Plaintiff - Appellant v. Amber Enterprises, Inc., a Corporation, doing business as Amber Pharmacy; Hy-Vee, Inc., a Corporation; Mike Agostino, Individually, Defendants - Appellees
• Court: U.S. Court of Appeals — Eighth Circuit

987 F.3d 758

Lana L. STARKEY, Plaintiff - Appellee

v.AMBER ENTERPRISES, INC., a Corporation, doing business as Amber Pharmacy, Defendant - Appellant

Hy-Vee, Inc., a Corporation; Mike Agostino, Individually, Defendants

Lana L. Starkey, Plaintiff - Appellant

v.Amber Enterprises, Inc., a Corporation, doing business as Amber Pharmacy; Hy-Vee, Inc., a Corporation; Mike Agostino, Individually, Defendants - Appellees

No. 19-3688

No. 19-3757

United States Court of Appeals, Eighth Circuit.

Submitted: December 4, 2020

Filed: February 4, 2021

Raymond Ralph Aranza, Jamie Marie Hurst, Walentine & O'Toole, Omaha, NE, for Plaintiff-Appellee.

Torrey L. J. Gerdes, Christopher M. Schmidt, Baylor & Evnen, Lincoln, NE, for Defendant-Appellant.

Before BENTON, ERICKSON, and GRASZ, Circuit Judges.

ERICKSON, Circuit Judge.

Lana L. Starkey claims her resignation from Amber Enterprises, Inc., doing business as Amber Pharmacy, ("Amber Pharmacy") was because of discrimination, retaliation, demotion and a hostile work environment. She brought this employment action asserting various federal and state claims against Amber Pharmacy, Hy-Vee, Inc., and Mike Agostino, the President of Amber Pharmacy, (collectively, "defendants") in the District Court of Douglas County, Nebraska ("state court"). The defendants removed the case to federal court and moved for summary judgment. The district court granted summary judgment in favor of the defendants on all but a portion of Starkey's Nebraska Fair Employment Practice Act ("NFEPA") claim, which it remanded to state court. We affirm the grant of summary judgment, but vacate the part of the order related to the NFEPA claim, with directions that the NFEPA claim be remanded to the state court in its entirety.

I. BACKGROUND

Starkey was employed with Amber Pharmacy, a company in the specialty pharmaceutical industry, from September 2001 until August 2015. Starkey's position changed in May 2014 from Director of Enrollment to Director of Financial Services. The change in position coincided with the acquisition of Amber Pharmacy by Hy-Vee, Inc., a supermarket chain.

Following the acquisition, Amber Pharmacy's accounting and financial department was found to be "in complete disarray," a situation exacerbated when Amber Pharmacy implemented a new operating system in February 2015. Amber Pharmacy had retained a third-party "implementation consultant" for the new operating system, and, on March 30, 2015, the consultant reported that the biggest obstacle to implementation of the new system was that the financial team was "under staffed," "potentially not the right skill level," and lacked "management in the financial area." The consultant recommended restructuring the financial team. At about the same time as the consultant's report, Starkey reported to others at Amber Pharmacy that Amber Pharmacy was being overpaid by Texas Medicaid; that incorrect billing codes were being used for Texas Medicaid; and that some employees were engaged in email practices that raised concerns about violating the Health Insurance Portability and Accountability Act of 1996 ("HIPAA"), 42 U.S.C. § 1320d–6.

Amber Pharmacy considered various plans for restructuring the financial department, ultimately deciding to eliminate Starkey's position. According to Amber Pharmacy, Agostino made this decision because the company needed to focus on accounting expertise, which Starkey lacked, and because Starkey had struggled to adapt to the new operating system. At meetings held on May 29, 2015, and June 2, 2015, Starkey was informed that her position was being eliminated. Amber Pharmacy offered Starkey a choice of two new positions, each of which were demotions with a substantial reduction in pay. On June 4, 2015, Starkey reluctantly accepted one of the positions but questioned whether her demotion was due to her report of Medicaid and HIPAA issues. Effective August 13, 2015, Starkey, who was then 51 years old, resigned. Starkey did not receive timely notice of her right to elect temporary continuation of health insurance coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"), 29 U.S.C. § 1161 et seq.

The district court granted summary judgment on each of Starkey's federal claims, exercised supplemental jurisdiction over the state claims, and granted summary judgment on all state claims, except for a portion of the NFEPA claim. On the NFEPA claim, the court reached a split decision, denying summary judgment on the portion of the claim that Starkey had been retaliated against for reporting Medicaid discrepancies but granting summary judgment on the parts of the claim based on Starkey reporting HIPAA issues and filing charges with the Nebraska Equal Opportunity Commission ("NEOC"). Having reached these conclusions, the court, citing 28 U.S.C. § 1367(c)(3), declined to exercise further supplemental jurisdiction over the NFEPA claim and remanded what remained to the state court.¹

Amber Pharmacy appeals the district court's partial denial of summary judgment on the NFEPA claim. Starkey appeals the district court's decision on all the claims except for her claim brought under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., which she abandoned on appeal.

II. DISCUSSION

We review the district court's grant of summary judgment de novo , "viewing the evidence and drawing all reasonable inferences in the light most favorable to [Starkey], the nonmoving party." Main v. Ozark Health, Inc., 959 F.3d 319, 323 (8th Cir. 2020) (quoting Kirkeberg v. Canadian Pac. Ry., 619 F.3d 898, 903 (8th Cir. 2010) ). We affirm where no genuine issue of material fact exists and the defendants are entitled to judgment as a matter of law. Eggers v. Wells Fargo Bank, N.A., 899 F.3d 629, 632 (8th Cir. 2018) (citations omitted).

A. Federal Claims

We first consider the district court's grant of summary judgment on Starkey's claim of age discrimination in violation of the Age Discrimination in Employment Act of 1967 ("ADEA"), 29 U.S.C. § 621 et seq. "To establish age discrimination, a plaintiff must prove by the preponderance of the evidence that age was the but-for cause of the employment decision." Hilde v. City of Eveleth, 777 F.3d 998, 1003 (8th Cir. 2015). Because Starkey does not allege direct evidence of age discrimination, her claim is analyzed under the familiar burden-shifting test in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973).

To establish a prima facie case, a plaintiff must show she "(1) was at least forty years old, (2) suffered an adverse employment action, (3) was meeting [her] employer's legitimate expectations at the time of the adverse employment action, and (4) was replaced by someone substantially younger." Gibson v. Am. Greetings Corp., 670 F.3d 844, 856 (8th Cir. 2012) (quoting Morgan v. A.G. Edwards & Sons, Inc., 486 F.3d 1034, 1039 (8th Cir. 2007) ). If the plaintiff establishes a prima facie case, the burden shifts to the employer to articulate a legitimate, nondiscriminatory reason for the adverse employment action. Id. If the employer proffers such a reason, the burden shifts back to the plaintiff to show that the proffered "reason was mere pretext for discrimination" and that "age was the ‘but-for’ cause of the challenged adverse employment action." Id. (quoting Haigh v. Gelita USA, Inc., 632 F.3d 464, 468 (8th Cir. 2011) ).

Assuming Starkey established a prima facie case, the defendants articulated a legitimate, nondiscriminatory reason for eliminating Starkey's position and demoting her: the need to restructure the financial department to put a stronger emphasis on accounting and more effectively implement the new operating system. See Aulick v. Skybridge Ams., Inc., 860 F.3d 613, 621 (8th Cir. 2017) (finding an employer's goal to focus on other areas of expertise to improve its business was a legitimate, nondiscriminatory justification for eliminating an employee's position). Amber Pharmacy asserted it needed to prioritize accounting in order to address issues arising out of the new operating system. Starkey admitted that "[a]ccounting is not for [her]." We will not second guess this business judgment, particularly when it was based, in part, on a third-party consultant's recommendations. This shifts the burden to Starkey to establish the reasons given by Amber Pharmacy are pretextual and that age was the real reason for her termination.

Starkey's evidence of pretext consisted of identification of Amber Pharmacy employees over the age of forty who were terminated as well as younger employees who absorbed Starkey's job duties following her demotion. In evaluating this evidence, the district court found Starkey's examples involving older employees did not show pretext because (1) the record was insufficient to assess the circumstances surrounding those employees’ terminations; (2) the few facts actually in the record did not show that the other employees were similarly situated to Starkey; and (3) discrimination against the other employees was irrelevant to Starkey's claim. The district court also found that Starkey failed to show the younger employees were similarly situated. Having closely examined the record below, we agree that Starkey's evidence was insufficient and did not satisfy her burden of showing age was a motivating factor in the defendants’ decision to restructure.

Starkey raised an additional issue for the first time in her reply brief on appeal, claiming the district court misconstrued her claim because her "situation is more akin to a reduction in force or ‘restructure’ where the employer terminates the older employee and does not replace her because the position no longer exists." Thus, Starkey argues, the termination of other older employees is relevant "statistical evidence" of pretext. We do not entertain belated arguments raised for the first time on appeal in reply briefs. Norwest Bank of N.D., N.A. v. Doth, 159 F.3d 328, 334 (8th Cir. 1998). But even if...