Yates v. Rexton Inc.

• Decision Date: 13 November 2000
• Docket Number: No. 00-1081,00-1081
• Citation: 267 F.3d 793
• Parties: (8th Cir. 2001) THOMAS O. YATES, PLAINTIFF - APPELLANT, v. REXTON, INC., DEFENDANT - APPELLEE. Submitted:
• Court: U.S. Court of Appeals — Eighth Circuit

Page 793

267 F.3d 793 (8th Cir. 2001)

THOMAS O. YATES, PLAINTIFF - APPELLANT, v. REXTON, INC., DEFENDANT - APPELLEE.

No. 00-1081

UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT

Submitted: November 13, 2000

Filed: October 5, 2001

Appeal from the United States District Court for the District of Minnesota. [Copyrighted Material Omitted]

[Copyrighted Material Omitted] Before Morris Sheppard Arnold and John R. Gibson, Circuit Judges, and Goldberg,¹ Judge.

John R. Gibson, Circuit Judge.

Thomas Yates appeals from the entry of summary judgment on his age discrimination claim against Rexton, Inc. Yates alleges that Rexton terminated his employment in violation of the Age Discrimination in Employment Act (ADEA), 29 U.S.C. §§ 621-634 (1994 & Supp. IV 1998), and the Minnesota Human Rights Act, Minn. Stat. § 363.03 (2000). Yates argues that the district court applied the wrong analytical framework and erred in its pretext analysis, that it improperly concluded that certain evidence submitted by Yates was inadmissible hearsay, and that it improperly made findings of fact in ruling on Rexton's summary judgment motion. We reverse and remand.

Because we are reviewing the entry of summary judgment, we view the facts in the light most favorable to Yates. Fast v. S. Union Co., 149 F.3d 885, 887 (8th Cir. 1998). Rexton manufactures and sells hearing aids. Yates co-founded the company in 1981 and was its first president. In 1986, he and the other Rexton shareholder sold the company to Siemens Hearing Instruments, Inc., a subsidiary of the German company Siemens AG. Following the sale, Yates no longer wished to be president of Rexton because he wanted to return to sales. He and Peter Daetz, the head of the hearing aid division at Siemens AG's corporate headquarters in Germany, agreed that Yates would become executive vice president of sales. John Zei became Rexton's president. In his new position, Yates managed Rexton's inside and outside sales forces.

In 1988, Rexton moved from Chicago to Plymouth, Minnesota, and the company recruited a new management team, engineers, technicians, and marketing and sales staff. Yates, one of the few Rexton employees to make the move, assisted in the recruitment.

Although Rexton's policy is that all employees are to receive regularly scheduled performance reviews with an accompanying written summary, Yates received no such reviews during his employment. According to Zei, the most important performance criterion for Yates was "how many did you sell and what price did you sell them at." Judged by that yardstick, Yates performed well. From 1988 to 1996, he was responsible for increasing Rexton's annual sales from $5 million in 1988 to $16 million in 1996. During that same time, Rexton's sales grew an average of 30 percent per year and the average selling price of an in-the-ear hearing aid rose from $179 to $302. Yates received approximately $22,650 in merit pay increases and $157,469 in performance bonuses from Rexton during those years.

Zei was promoted in 1991 to become president of Siemens Hearing Instruments in New Jersey and chairman of the board of Rexton. While he was still in Minnesota as Rexton's president, Zei asked Yates if he had plans to retire and, in spite of Yates's denial, Zei told others that Yates would soon be retiring. Zei was replaced as president of Rexton by Brian Woodhurst, who was terminated by Hans Weckherlin, a managing director of Siemens AG, within a few months of his hiring. The next Rexton president, Delain Wright, remained in that position through the time Yates was terminated in 1996.

During his tenure, Wright had numerous conversations with Zei in which Zei expressed the need to get Yates removed as a Rexton employee. Zei attributed this decision to two Siemens AG officials in Germany: Weckherlin and Dr. Prigge, who were a managing director and a manager, respectively. According to Wright, Weckherlin and Prigge had told Zei that they were of the opinion that employees over age 60 should retire, and they believed that Yates would retire soon because of his age. Zei told Wright that he was authorized to enter into a consulting agreement with Yates, which Zei believed Yates would take because no other company would hire him at this time in his life.

Zei's pressure on Wright was documented in an August 13, 1994 memo stating: "We have discussed the issue of Tom Yates. You have a commitment to demonstrate that Tom is off the payroll and head count by the end of the year. You are authorized to keep him on in a consulting capacity." Zei and Yates corresponded directly about a potential consulting agreement. In a letter dated June 8, 1995, Zei rejected Yates's proposal and wrote that he had substantial concerns about Yates's performance. Yates responded a month later and referred to a June 20 lunch he had with Wright in which Wright assured him that there were "no issues" with his performance. Yates's letter continued: "Indeed, not only have you and I never had a discussion about my performance, no one at Rexton (or Siemens, for that matter) has ever questioned my ability as a manager."

Wright told Yates in the spring of 1996 that he was going to hire Tom Cutting, age 35, to assist him in his duties. Although Wright asserts that Yates told him in the spring of 1995 that he intended to retire in two years, Wright also acknowledged that he became aware no later than the spring of 1996 that Yates had no such plans. Nevertheless, Wright sent Yates a memo on April 5, 1996, stating that he intended to bring Cutting on in early May as National Sales Manager. He intended for Cutting to begin with responsibility for inside sales, then gradually take on more responsibility for marketing and behind-the-ear hearing aid sales, and eventually take over all of Yates's duties.

On November 23, 1996, Wright terminated Yates at age 68. Cutting was then in charge of the inside sales force and Yates was responsible for marketing, behind-the-ear sales, and outside sales. Cutting never did assume all of Yates's responsibilities, as the supervision of outside sales fell to Wright.

Rexton asserts that Yates was part of an across-the-board reduction-in-force which resulted in the termination of eight employees. The average age of the terminated individuals, excluding Yates, was approximately 35. In a letter written by its attorney in response to the Equal Employment Opportunity Commission's request for information, Rexton took the position that Yates was included in the reduction-in-force because of poor performance: he was unable to successfully hire and retain field sales personnel; he failed to adequately review and control expense reports; he failed to follow up with training field sales personnel; he failed to develop meaningful sales plans and promotions; he failed to record business deals with customers and made poor decisions on business loans to customers; and he used abusive language and engaged in abusive behavior towards other employees.

Yates argues that these reasons are pretextual. He asserts that age was the reason for his firing and in support offers evidence from a variety of sources. He points to: comments made by Zei, Prigge, and Weckherlin expressing their opinion that Yates would and should retire because of his age; other Rexton and Siemens employees over fifty who were fired and replaced by much younger employees; ageist attitudes by Siemens management that, because of the control Siemens exercised over Rexton, were relevant to Yates's situation; and the promotion and retention of Tom Cutting.

I.

We review the district court's grant of summary judgment de novo, giving the non-moving party the benefit of any reasonable inferences. Britton v. City of Poplar Bluff, 244 F.3d 994, 996 (8th Cir. 2001). We affirm only where there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fast v. S. Union Co., 149 F.3d 885, 889 (8th Cir. 1998).

Yates asserts that Rexton discriminated against him in violation of both federal age discrimination and Minnesota human rights laws. The district court applied the burden-shifting analysis of McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973), to both claims. Yates argues that the district court erred in applying that analysis, and that it should have used the mixed motives analysis of Price Waterhouse v. Hopkins, 490 U.S. 228 (1989). We understand Yates's argument to be that the district court should have found direct evidence of discrimination, thereby placing the burden on Rexton to prove that it would have made the same decision even if it had not taken the illegitimate reason into account. See Radabaugh v. Zip Feed Mills, Inc., 997 F.2d 444, 448 (8th Cir. 1993). In contrast, when the plaintiff presents indirect evidence, he or she must establish a prima facie case of discrimination before the burden of production shifts to the employer to produce evidence of a legitimate, non-discriminatory reason. The burden then shifts back to the plaintiff to show that the employer's explanation is a pretext for discrimination. The burden of persuasion remains with the plaintiff throughout. Hutson v. McDonnell Douglas Corp., 63 F.3d 771, 776-77 (8th Cir. 1995).

The district court was correct in applying the McDonnell Douglas analysis, as Yates presented no direct evidence of discrimination.² "Direct evidence is that which demonstrates a specific link between the challenged employment action and the alleged animus." Kells v. Sinclair Buick-GMC Truck, Inc., 210 F.3d 827, 835 (8th Cir. 2000). Although Yates argues that the statements of various Siemens managers about him specifically and about age in general constitute direct evidence, they do not. Rexton presented evidence that Wright alone made the decision to include Yates in the reduction-in-force without input from Zei or anyone else. In the face of a summary judgment motion, Yates is duty-bound to set forth specific facts...