Steffen v. Meridian Life Ins. Co.

• Decision Date: 18 January 1989
• Docket Number: No. 87-1059,87-1059
• Citation: 859 F.2d 534
• Parties: 48 Fair Empl.Prac.Cas. 173, 47 Empl. Prac. Dec. P 38,347, 57 USLW 2318 Walter W. STEFFEN, Plaintiff-Appellant, v. MERIDIAN LIFE INSURANCE COMPANY, and Meridian Mutual Insurance Company, Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 534

859 F.2d 534

48 Fair Empl.Prac.Cas. 173,

47 Empl. Prac. Dec. P 38,347, 57 USLW 2318

Walter W. STEFFEN, Plaintiff-Appellant, v. MERIDIAN LIFE INSURANCE COMPANY, and Meridian Mutual Insurance Company Defendants-Appellees.

No. 87-1059.

United States Court of Appeals Seventh Circuit.

Argued Oct. 1, 1988.

Decided Oct. 11, 1988.

Rehearing and Rehearing In Banc Denied Jan. 18, 1989.

Robert G. Barker, Barker, Barker & Silver, Indianapolis, Ind., Donna J. Brusoski, E.E.O.C., Washington, D.C., for plaintiff-appellant.

John T. Neighbours, Baker & Daniels, Indianapolis, Ind., for defendants-appellees.

Before CUDAHY and MANION, Circuit Judges, and WILL, Senior District Judge. ^*

MANION, Circuit Judge.

Walter Steffen sued Meridian Mutual Insurance Company (Meridian Mutual) and its wholly-owned subsidiary, Meridian Life Insurance Company (Meridian Life), under the Age Discrimination in Employment Act (ADEA). Steffen claimed that Meridian Mutual and Meridian Life (whom we will refer to collectively as "Meridian") demoted him because of his age and then later discharged him because of his age and in retaliation for exercising his ADEA rights. The district court granted summary judgment in Meridian's favor on Steffen's discriminatory demotion and retaliatory discharge claims. Steffen's discriminatory discharge claim went to trial and a jury ruled in his favor. The district court, however, granted Meridian judgment notwithstanding the verdict and, in the alternative, conditionally granted Meridian a new trial. Steffen appeals all three decisions of the district court. We affirm the district court's grant of summary judgment and judgment notwithstanding the verdict on the discharge claims, and reverse the district court's grant of summary judgment on the demotion claim.

I. FACTUAL BACKGROUND AND PROCEEDINGS IN DISTRICT COURT

On February 28, 1979, two weeks short of his 61st birthday, Steffen began working for Meridian at its Indianapolis, Indiana headquarters as a Senior Vice-President in charge of Meridian Life. Over the course of the next few years Steffen capably performed Why Steffen was replaced as head of Meridian Life is the subject of considerable dispute. Meridian claims that Steffen's replacement was simply the result of an understanding between Steffen and Harold McCarthy, the President and Chief Executive Officer of Meridian Mutual, that Steffen was only going to work for Meridian on a short-term basis. McCarthy testified that Steffen and he had discussed Steffen's age during their initial employment discussions because McCarthy wanted to ascertain whether Steffen would be on the job long enough to direct Meridian Life through the initial phases of its new strategies and because McCarthy did not want to mislead Steffen about Meridian's pension plan, which excluded new hires older than 59. According to McCarthy, Steffen "indicated he intended to work four or five years, which, added to age 60, came up to his 65th birthday in my mind." Thereafter, McCarthy mailed Steffen a letter stating:

his job and Meridian Life enjoyed considerable success. Nonetheless, on April 1, 1983, Meridian replaced Steffen as head of Meridian Life with a younger man, William Madren, who assumed the position of General Manager and Vice-President. Steffen continued on with the company as Senior Vice-President and was responsible for performing actuarial services.

I view the broad, general assignment as being twofold:

1. Take a leadership role in helping us move the Life operations from the plateau we now seem to be occupying to a position where we will have doubled our size and premiums in the next five years.

2. Help in locating, training and fixing in place, a successor who could continue the direction of the Life insurance operations at the increased tempo we will hope to have achieved in the next four or five years.

Steffen wrote back accepting the position.

McCarthy claimed that his understanding that Steffen would step down on his 65th birthday was reinforced during the next few years. Steffen's first evaluation dated February, 1980 stated that "[Steffen] knows he is here on a short-term basis and for a specific assignment." A 1981 file memorandum, which McCarthy testified was created cooperatively by Steffen and him, stated that in 1981 Steffen was expected to "help the President locate and hire the person we expect will head [Meridian Life] after 3/83." A January 25, 1982 performance evaluation prepared by McCarthy stated that one of Steffen's objectives at the time of being hired was to "[f]ind a successor and have him successfully functioning by March, 1983" and that "I'm sure [Steffen] hopes to continue with the company in some capacity after age 65. We've discussed an actuarial consultant relationship which may be both a necessary and good arrangement for both of us." Steffen himself interviewed potential replacements in 1981 and 1982.

In October, 1982, Steffen interviewed William Madren, the person who turned out to be his successor. Prior to this interview, Madren and McCarthy had discussions that led to what McCarthy described as "an understanding that we wanted to be married...." On October 6, 1982, McCarthy and Steffen discussed Madren and both agreed that Madren was an excellent candidate. But Steffen objected to the proposed date McCarthy set for Steffen's replacement by Madren, April 1, 1983. In an October 6, 1982 "note to file" McCarthy wrote:

I have talked from the very beginning about the five years of Walt's efforts which would result in our having his replacement on board and functioning by the end of that time. My reference to five years was based on the fact that Walt was 60 years of age at the time he came with the Company. What I overlooked was that he was near the end of his 60th year and, for all practical purposes, was 61 years old. As a result, I was seeing 65 as the end of this time frame, and he was seeing his age 66 as the end.

Steffen testified that October 6, 1982 was the first time that he was informed that he was going to be replaced after his 65th birthday. Steffen told McCarthy that McCarthy formally offered Madren the position as the head of Meridian Life on November 15, 1982. In a draft speech to Meridian managers, McCarthy stated that Madren was replacing Steffen "by [Steffen's] 65th birthday, which happens to be in March." A Meridian newsletter stated, "Steffen ... will work with ... Madren in the transfer of responsibilities until March 31, ... Steffen's normal retirement date...."

"I can't buy it." Steffen testified that he reminded McCarthy that when Steffen came to Meridian he "had accepted non-inclusion in the [Meridian] pension plan or no special arrangement because I had intended to work beyond age 65." Steffen then proposed that he be named president of Meridian Life and that Madren be employed as general manager under Steffen until Steffen retired when he was 70. When Steffen reiterated this suggestion at a later date McCarthy stated, "That's impossible." According to Steffen, he told McCarthy to think of the situation from Steffen's perspective and McCarthy responded, "When I am 65, I'll be ready to retire."

While Steffen's objections did not stop McCarthy from replacing him as the head of Meridian Life, McCarthy did not have any problems with Steffen staying on to perform actuarial duties. On October 14, 1982, McCarthy wrote Madren stating:

One of the problems we will have is in creating the right kind of structure and environment for Walt Steffen to continue working with us. As you and I both know, we need his services. I haven't come up with a good answer yet and am depending on you to help me find the answer since you must be satisfied and comfortable with whatever solution we find.

In November, 1982, McCarthy again wrote Madren stating:

I would like you to help me in working out the position description for Walt Steffen and the relationship the three of us will have. Your handling of this relationship will probably be one of the most important tests of your ability to surround the job and provide us with the leadership I feel you are capable of offering.

On March 31, 1983, Madren became General Manager and Vice-President for Meridian Life. Steffen continued on with Meridian Life as a Senior Vice-President performing actuarial duties. Meridian did not decrease Steffen's pay after the demotion. In fact, Steffen received a 5% pay raise. There is some dispute, however, over whether the size of his annual pay increases lessened. In any event, Steffen was not pleased with the realignment of responsibilities and contacted an attorney. His attorney informed him that under the ADEA Steffen was required to give the Equal Employment Opportunity Commission ("EEOC" or "Commission") notice of the alleged discrimination. On May 13, 1983, Steffen went to the EEOC's Indianapolis District Office. According to Steffen, an Intake Officer told him that he could either file a "formal complaint," which the EEOC would immediately investigate, or he could file an informal complaint by filling out an Intake Questionnaire, which would protect his right to bring an ADEA action if his private conciliation attempts were unsuccessful. Steffen then filled out the Intake Questionnaire in reliance upon the representation that it would preserve his right to bring suit.

A. Steffen's Discharge

In September, 1983, Steffen left for a three-week combined business and pleasure trip to California and Hawaii. While Steffen attended the Pacific Insurance Conference in Hawaii, Daniel Lau, the President of Grand Pacific Life Insurance Company (Grand Pacific), asked him to perform an evaluation of Grand Pacific. Steffen, who had known Lau for over twenty years, spent the next twenty-four hours deciding whether to perform the evaluation. Steffen testified that in making the decision he balanced the following four considerations: 1) he and his wife were on vacation; 2) because Meridian was...