Opinion ID: 3010563
Heading Depth: 2
Heading Rank: 2

Heading: Pretext under McDonnell Douglas-Burdine.

Text: While Price Waterhouse involves evidence which directly reflects discriminatory animus, cases under McDonnell DouglasBurdine involve circumstances which, if left unexplained or without a credible explanation, allow a jury to infer discriminatory animus. As the Supreme Court has noted, we are willing to presume this largely because we know from our experience that more often than not people do not act in a totally arbitrary manner, without any underlying reasons, especially in a business setting. Thus, when all legitimate reasons for rejecting an applicant have been eliminated as possible reasons for the employer's actions, it is more likely than not the employer, who we generally assume acts only with some reason, based his decision on an impermissible consideration such as race. Furnco Construction Corp. v. Waters, 438 U.S. 567, 577 (1978) (emphasis in original); Chipollini, 814 F.2d at 897. The Supreme Court, therefore, established the now familiar shifting burdens of production. First, the plaintiff has the burden of proving by the preponderance of the evidence a prima facie case of discrimination. Second, if the plaintiff succeeds in proving the prima facie case, the burden shifts to the defendant to articulate some legitimate, nondiscriminatory reason for the employee's rejection. Third, 15 should the defendant carry this burden, the plaintiff must then have an opportunity to prove by a preponderance of the evidence that the legitimate reasons offered by the defendant were not its true reasons, but were a pretext for discrimination. Texas Dept. of Comm. Affairs v. Burdine, 450 U.S. 248, 253-53 (1981) (citations omitted). These shifting burdens are designed to assure that the `plaintiff [has] his day in court despite the unavailability of direct evidence.' Trans World Airlines, Inc. v. Thurston, 469 U.S. 111, 121 (1985) (quoting Loeb v. Textron, Inc., 600 F.2d 1003, 1014 (1st Cir. 1979)). In this case, the district court concluded that Keller failed to establish a prima facie case, and in the alternative that he failed to present any evidence that Credit Alliance's proffered reason was pretextual. We disagree.
To establish a prima facie case of age discrimination under the ADEA, Keller must show: (1) that he belongs to the protected class; (2) that he was qualified for the position; (3) that he suffered an adverse employment decision; and (4) that he was replaced by someone sufficiently younger to permit an inference of age discrimination or his employer continued to seek applicants from among those having his qualifications. Sempier v. Johnson & Higgins, 45 F.3d 724, 728 (3d Cir. 1995); Chipollini, 814 F.2d at 897. See O'Connor v. Consolidated Coin Caterers Corp., 116 S. Ct. 1307 (1996). According to the district court, Keller failed to demonstrate that he had been replaced by someone sufficiently younger or that he was qualified 16 for the position. But as we have noted, the prima facie case under the McDonnell Douglas-Burdine pretext framework is not intended to be onerous. Id. at 728. And as the Supreme Court has noted, all that is required is evidence adequate to create an inference that an employment decision was based on a[n] [illegal] discriminatory criterion . . . . Teamsters v. United States, 431 U.S. 324, 358 (1977). For the following reasons, we conclude that the district court required Keller to establish an impermissibly demanding prima facie case. A)Keller's Qualifications. At the prima facie stage of the litigation, a plaintiff only needs to demonstrate that [he] `possesses the basic skills necessary for the performance of [the] job.' Owens v. New York City Housing Auth., 934 F.2d 405, 409 (2d Cir. 1991) (citations omitted). As we have stated, a plaintiff's qualifications for purposes of proving a prima facie case is determined by an objective standard. Sempier, 45 F.3d at 729; Weldon v. Kraft, Inc., 896 F.2d 793, 798 (3d Cir. 1990); Jalil v. Avdel Corp., 873 F.2d 701, 707 (3d Cir. 1989). Accordingly, the proper inquiry is whether Keller had the objective experience and educational background necessary to qualify as a viable candidate for the position[] he held. Sempier, 45 F.3d at 729. Any subjective analysis of the employee's job performance is properly examined at the pretext stage of the litigation. Id.; Weldon, 896 F.2d at 798. Even arguably quantifiable measures such as productivity and output can constitute a subjective determination by [the defendant] of the performance level [plaintiff] had to achieve. 17 Weldon, 896 F.2d at 799. We rely upon objective factors alone because subjective evaluations are more susceptible of abuse and more likely to mask pretext. Id. at 798 (citing Fowle v. C & C Cola, 868 F.2d 59, 64-65 (3d Cir. 1989)). Denying a plaintiff the opportunity to move beyond the initial stage of establishing a prima facie case because he has failed to introduce evidence showing he possesses certain subjective qualities would improperly prevent the court from examining the criteria to determine whether their use was mere pretext. Id. When viewed in the light most favorable to the nonmoving party, Keller clearly established that he was objectively qualified for his position. First, Keller's qualifications were easily established by the mere fact that he had held an executive position with Credit Alliance for over sixteen years. Sempier, 45 F.3d at 729 (Sempier had the objective experience and education necessary to qualify as a viable candidate for the positions he held. He had held executive positions at J & H for over twenty years.). In addition, Keller had served on the board of directors for over six years, and had been considered for the position of President of the company. While it is, of course, possible for a company to employ an unqualified individual and promote him or her to the highest levels of management, it would be imprudent for us to presume such an unlikely scenario at the summary judgment phase. We reached the same conclusion with similar facts in Sempier. In that case, we noted that: the record of [the plaintiff's] twenty years employment as an executive, his record as Comptroller 18 and then Treasurer of J & H, his election to the Board on two occasions, and his appointment as Chief Financial Officer and then as Chief Administrative Officer leads to the almost inevitable inference that he was qualified for the position from which he was discharged. Id. at 729. In this case, Keller's objective qualifications lead inevitably to the conclusion that he was qualified for the position from which he was discharged. The district court found that Keller was not qualified for his job because he had failed to make adequate progress toward his stated goal of raising $1.5 billion. But while the amount of funds Keller actually raised is obviously measured by an objective standard, the question whether Keller made adequate progress toward his goal is an inherently subjective determination. In other words, whether Keller's progress can be considered adequate depends not only upon his results and the context in which those results were achieved, but whether Credit Alliance was satisfied with those results. A subjective analysis of Keller's performance and the reasons for his failure is misplaced at the prima facie stage. Weldon, 896 F.2d at 798-99 ([W]hile objective qualifications should be considered in evaluating the plaintiff's prima facie case, the question of whether an employee possesses a subjective quality . . . is better left to the later stage of the McDonnell Douglas analysis.); Fowler, 868 F.2d at 64-65. A plaintiff need only demonstrate that he or she possessed the objective experience and education necessary to perform the job in question. Keller's education, promotions, and 19 more than sixteen years of service as an executive for Credit Alliance are sufficient to demonstrate that he was qualified for his position for purposes of establishing a prima facie case under the ADEA. The question whether Keller's performance in reaching Credit Alliance's funding goal was adequate is a subjective determination best left to the pretext stage under McDonnell Douglas-Burdine.4 B)Replaced by Someone Sufficiently Younger. In order to establish a prima facie case, the plaintiff must also demonstrate that he or she was replaced by someone sufficiently younger to permit an inference of age discrimination. Sempier, 45 F.3d at 728. The district court found that Keller did not meet this requirement because he was replaced by someone only five years younger. Keller, slip op. at 8.5 We disagree. 4. The cases relied upon by Credit Alliance for the proposition that employees must demonstrate that they were performing their jobs adequately as an element of the prima facie case are readily distinguishable. In every case, the plaintiff conceded that his or her performance was deficient and offered no explanation for the poor performance. See Perry v. Prudential Bache Securities, Inc., 738 F. Supp. 843, 848 n.1 (D.N.J. 1989), aff'd without opinion, 904 F.2d 696 (3d Cir. 1990); Spangle v. Valley Forge Sewer Auth., 839 F.2d 171, 173-74 (3d Cir. 1988); Dale v. Chicago Tribune Co., 797 F.2d 458 (7th Cir. 1986). Credit Alliance's argument that Keller admitted that he was not qualified for the job is similarly misplaced. Although Keller admits that he did not reach the financing goal, he never admitted that he was unqualified, or that he was responsible for the failure to reach the target. Appellee's Br. at 26. 5. Both the district court and Credit Alliance state the age difference between Keller and his replacement as four years. The evidence, however, clearly demonstrates that at the time Keller was fired, he was 51 and his replacement, Joseph McDevitt was 46. 20 Although the district court did not have the benefit of guidance from the Supreme Court on this particular issue at the time it rendered its decision, the Court has since held that there is no particular age difference which must be shown to make out a prima facie case. O'Connor, 116 S. Ct. at 1310 (holding that a plaintiff need not be replaced by someone outside the protected class to establish a prima facie case); Sempier, 45 F.3d at 729. In other words, [t]here is no magical formula to measure a particular age gap and determine if it is sufficiently wide to give rise to an inference of discrimination. Barber v. CSX Distribution Servs., 68 F.3d 694, 699 (3d Cir. 1995). As we have noted: [d]ifferent courts have held, for instance, that a five year difference can be sufficient, Douglas v. Anderson, 656 F.2d 528, 533 (9th Cir. 1981), but that a one year difference cannot. [Gray v. York Newspapers, Inc., 957 F.2d 1070, 1087 (3d Cir. 1992)]. Sempier, 45 F.3d at 729. See also Corbin v. Southland Int'l Trucks, 25 F.3d 1545, 1550 (11th Cir. 1994) (finding evidence of pretext when a 53 year-old was treated more favorably than a 58 year-old employee). In order to establish a prima facie case, the evidence need only create an inference of discrimination if the employer's actions are left unexplained. O'Connor, 116 S. Ct. at 1310. Accordingly, the replacement by even an older employee will not necessarily foreclose prima facie proof if other direct or circumstantial evidence supports an inference of discrimination. Douglas v. Anderson, 656 F.2d at 533. As the Supreme Court has emphasized, [t]he fact that one person in the 21 protected class has lost out to another person in the protected class is thus irrelevant, so long as he has lost out because of his age. O'Connor, 116 S. Ct. at 1310. In Sempier, for example, we found that the plaintiff had established a prima facie case despite being replaced by someone only four years younger. 45 F.3d at 729-730. Without deciding whether four years alone was enough, we concluded that the four year difference, combined with the fact that the plaintiff's functions were also temporarily transferred to someone well over ten years younger, were sufficient to establish a prima facie case. Id. We conclude that if left unexplained, the five year age difference between Keller and his replacement, when combined with the other elements of the McDonnell Douglas prima facie case standard, is sufficient to establish an inference that Keller's age was a motivating factor in Credit Alliance's decisions. Accord Douglas v. Anderson, 656 F.2d 528, 533 (9th Cir. 1981). Given Keller's experience, and the fact that the age difference spans a difference in chronological decades, so to speak (Keller was in his fifties while his replacement was in his forties), this age difference is sufficient to support such an inference. See also Pace v. Southern Ry. System, 701 F.2d 1383, 1387 (11th Cir. 1983) (Seldom will a sixty year-old be replaced by a person in the twenties. Rather the sixty-year-old will be replaced by a fifty-five year-old, who, in turn, is succeeded by someone in the forties, who also will be replaced by a younger person.). 22 Finally, as we discussed above in the context of Price Waterhouse and will address below in the context of McDonnell Douglas-Burdine, the record contains evidence beyond the prima facie case that creates an inference of discrimination. Ryan's alleged age-related comments support an inference that Credit Alliance's employment decisions with respect to Keller were based upon his age. This renders the age of Keller's replacement less relevant for purposes of establishing a prima facie case. O'Connor, 116 S. Ct. at 1310 ([T]he proper solution to the problem lies not in making an utterly irrelevant factor an element of the prima facie case, but rather in recognizing that the prima facie case requires `evidence adequate to create an inference that an employment decision was based on a[n] [illegal] discriminatory criterion . . . .') (citation omitted). In sum, because Keller has sufficiently demonstrated that he was qualified for the position from which he was discharged, that he was replaced by someone sufficiently younger, and there is additional evidence beyond the McDonnell DouglasBurdine prima facie case standard from which a jury could conclude that Credit Alliance's employment decisions were motivated by Keller's age, the district court erred when it concluded that Keller failed to establish a prima facie case. 2.Evidence Supporting An Inference of Discrimination. The district court did not address Keller's claim that Ryan's comment was direct evidence of discrimination, apparently because it concluded that Keller had failed to provide sufficient evidence to demonstrate pretext under McDonnell Douglas-Burdine. 23 But even if we were to assume that Keller's evidence is insufficient under the Price Waterhouse standard, it is more than sufficient to withstand summary judgment under McDonnell DouglasBurdine standard. First, because Keller offered evidence beyond the prima facie case from which an inference of discrimination could be drawn, Credit Alliance's proffered legitimate reason merely creates a material issue of fact as to whether the decision to terminate Keller was motivated by discriminatory animus. Waldron v. SL Indus., Inc., 56 F.3d 491, 495, 502-03 (3d Cir. 1995); Fuentes v. Perskie, 32 F.3d 759, 764 (3d Cir. 1994). Second, Keller has offered sufficient evidence that could support a finding that the proffered reason is pretext, which creates a material issue of fact as to the credibility of Credit Alliance's proffered reason. A)Evidence of Discrimination. We have consistently held that a plaintiff who has made out a prima facie case can defeat a motion for summary judgment by adducing evidence, whether circumstantial or direct, that discrimination was more likely than not a motivating or determinative cause of the adverse employment action. Fuentes, 32 F.3d at 764. We have also consistently held that since discriminatory comments by an executive connected with the decisionmaking process will often be the plaintiff's strongest circumstantial evidence of discrimination, they are highly relevant. . . . Abrams, 50 F.3d at 1215. Evidence of agebiased comments made by a supervisor, therefore, could support an inference that the termination decision was made because of the 24 plaintiff's age. Id. at 1214; Torre v. Casio, Inc., 42 F.3d 825, 834 (3d Cir. 1994); Armbruster, 32 F.3d at 783. Indeed, we have held that discriminatory comments by nondecisionmakers, or statements temporally remote from the decision at issue, may properly be used to build a circumstantial case of discrimination. See Lockhart v. Westinghouse Credit Corp., 879 F.2d 43, 54 (3d Cir. 1989) (finding age-biased comment relevant even when made subsequent to plaintiff's termination); Roebuck v, Drexel University, 852 F.2d 715, 733 (3d Cir. 1988) (upholding admissibility of discriminatory comment by decisionmaker made five years before denial of tenure). Abrams, 50 F.3d at 1214. When combined with Keller's prima facie case, Ryan's suggestion that perhaps Keller was getting too old for the job, and that maybe he should hire some young bankers could clearly support an inference of discrimination. This conclusion is supported by our prior decisions. In Roebuck, we concluded that the comment that in terms of comparable white faculty members . . . blacks would cost Drexel more money to hire those black faculty members, could give rise to an inference of discrimination even when made five years before the decision in question. 852 F.3d at 733. In Lockhart, we found that a reasonable jury could also consider the statement Westinghouse Credit was a seniority driven company with old management and that's going to change, `I'm going to change that,' as evidence of age-bias. 879 F.2d at 54. Similarly, in Waldron we found that when combined with the plaintiff's prima facie case, a comment that he should lose some weight because it would make him healthier and look younger, made five months before the termination, could support the conclusion that age was 25 more likely than not a determinative factor. 56 F.3d at 502. Likewise, an inference of discrimination was evident in Abrams, given comments like things would hum around here when we got rid of the old fogies, and that two older employees were referred to as a dinosaur and the old men. 50 F.3d at 1214. Finally, in Torre, we found that the statement did you forget or are you getting too old, you senile bastard? could reasonably lead to an inference of age based discrimination. 42 F.3d at 834. See also Robinson, 23 F.3d at 1165; Shager, 913 F.2d at 402-03. Because Keller produced evidence that could support the conclusion that age was more likely than not a motivating factor in Ryan's decision to terminate him, Credit Alliance's proffered reason merely creates a material issue of fact for a jury to resolve. The district court's grant of summary judgment to Credit Alliance, therefore, was inappropriate. Credit Alliance failed to satisfy its burden of proving the absence of genuine issues of material fact. B)Evidence That the Employer's Proffered Reason Is Not Worthy Of Credence. A plaintiff in an employment discrimination case may also defeat a motion for summary judgment by presenting evidence from which a reasonable factfinder could conclude that the defendant's proffered justifications are not worthy of credence. Torre, 42 F.3d at 832; Fuentes, 32 F.3d at 764 (legal principle reaffirmed in Sheridan v. E.I. DuPont de Nemours & Co., slip. op. at 12-13 (3d Cir. 1996) (en banc)). Credit Alliance's proffered reason for terminating Keller was his failure to make adequate 26 progress toward achieving their financing goal. Credit Alliance argues, and the district court concluded, that Keller's evidence is aimed at simply demonstrating that this decision was wrong because, according to Keller, it was impossible to reach the goal. Keller, slip op. at 10. This misinterprets both Keller's evidence and argument. Keller is not arguing that the proffered reason is pretextual because it is wrong. He is arguing that Credit Alliance was aware of the outside factors which hindered his ability to obtain funding, and that they did not fault him for the results of his efforts. While pretext is not demonstrated by showing that the employer was mistaken, Ezold v. Wolf, Block, Schorr and SolisCohen, 983 F.2d 509, 531 (3d Cir. 1992), it can be established by evidence of inconsistencies or anomalies that could support an inference that the employer did not act for its stated reason. Sempier, 45 F.3d at 731 (citing Josey v. John R. Hollingsworth Corp., 996 F.2d 632, 638 (3d Cir. 1993)) (emphasis added). The thrust of Keller's argument and evidence is that Credit Alliance was not dissatisfied with his performance, because it knew that efforts to obtain outside fundraising were impeded by various market forces. To support his claim that his performance did not play a role in Ryan's decision to fire him, Keller presented evidence that Credit Alliance's difficulty in obtaining greater financing was due to factors substantially beyond his control, and more importantly, that Credit Alliance recognized this fact. Keller 27 argues that one of the reasons that Credit Alliance had difficulty obtaining new funding was that it had a poor credit rating which was influenced by its performance and the downturn of the Japanese economy. (Credit Alliance's parent company, ORIX, is a Japanese owned company.) To support his argument Keller submitted documents from several ratings agencies. Keller also submitted evidence which focused upon the banks' reluctance to do business with Credit Alliance because of its poor credit rating, the trouble with the Japanese economy, and Credit Alliance's level of delinquent accounts. In fact, several sources which decided to discontinue funding Credit Alliance justified their decision with these various reasons. Keller also submitted affidavits and depositions to support his claim that he had informed the board of these difficulties and that the board accepted his explanation. In particular, one member of the board of directors specifically corroborates Keller's claim through December of 1991. According to the former director: At the board of directors meetings, Keller described the obstacles in securing credit facilities including Credit Alliance's past due accounts and the company's status as a subsidiary of a Japanese corporation. No one challenged or disagreed with Keller's presentations at those meetings or suggested in any way that the difficulties he was encountering were in any way due to his performance rather than factors beyond his control. A1126 (Affidavit of Neil Umhafer). In addition, Keller points to file memos that he sent to Ryan which detailed the bankers' statements that they would not lend to Credit Alliance because of 28 its Japanese parent company, the nature of Credit Alliance's business, or because of the conservative approach toward lending adopted by many in the credit market at the time. Keller, therefore, relied upon evidence that could establish: (1) that Credit Alliance's disappointing progress was due to forces beyond his control; (2) that Credit Alliance recognized that fact; and (3) that it knew that its poor showing was not attributable to him. Seen in the light most favorable to Keller, a reasonable jury could consider Credit Alliance's explanation that Keller was fired for poor performance pretextual. Sorba v. Pennsylvania Drilling Co., 821 F.2d 200, 205 (3d Cir. 1987) (reversing summary judgment when the plaintiff proffered evidence that his supervisors realized that the poor results were not his fault. . . . [T]he testimony of the movant's witnesses was inconsistent regarding whether they believed [plaintiff]'s performance caused the unsatisfactory job results.). See also Rhodes v. Guiberson Oil Tools, 75 F.3d 989 (5th Cir. 1996) (en banc) (holding that there was sufficient evidence to support a finding of discrimination when the plaintiff demonstrated that the employer's proffered explanation, poor performance, was pretextual because his poor results were due to the company's prices and a poor customer base); Johnson v. Group Health Plan, 994 F.2d 543, 546 (8th Cir. 1993) (report stating that morale problems caused by other factors created factual issue regarding plaintiff's performance); Mastrangelo v. Kidder, Peabody & Co., 722 F. Supp. 1126, 1133 (S.D.N.Y. 1989) (sufficient evidence that defendant's criticism of plaintiff's 29 performance was pretextual where problems of his department were attributable, at least in part, to matters beyond his control). In further support of his claim, Keller points to the absence of any official criticism of his performance. In Sempier, we concluded that a genuine issue existed as to pretext because of the plaintiff's own testimony of satisfactory performance combined with evidence that he was not criticized while still employed. 45 F.3d at 721-32. The only evidence offered by Credit Alliance is the post-hoc deposition testimony of some of the members of the board of directors who ratified the decision to fire Keller. With the exception of Ryan's testimony and a purported comment made after Ryan decided to fire Keller, much of the evidence is ambiguous as to whether the statement represented criticism. For the most part, Credit Alliance asks us to infer that questions about the progress of the fundraising were criticisms of Keller's performance. For example, Credit Alliance points to the fact that one of its outside directors suggested that Keller be relieved of his duties as Chief Credit Officer so he could concentrate on raising funds, and asks that we consider this as criticism of Keller's performance. But that would require us to draw an unwarranted inference at the summary judgment phase, particularly in view of the fact that Keller offered evidence that when questioned about the progress, the board accepted his explanation that difficulties in the U.S. and Japanese economies made it difficult to secure funding on terms more favorable than the terms provided by their current source. 30 Finally, Keller argues that the district court improperly relied upon events that occurred after he was terminated (i.e., the success of his younger replacement), and also failed to acknowledge the role he played in those subsequent events. As an initial matter, we agree with Keller that the district court improperly relied upon his successor's performance. The fact that his successor reached Credit Alliance's goal has no bearing on whether the decision to fire Keller was motivated by discriminatory animus. The employer could not have been motivated by knowledge it did not have, and it cannot claim that the employee was fired for the nondiscriminatory reason. McKennon v. Nashville Banner Publishing Co., 115 S. Ct. 879, 885 (1995). We also agree that Keller's performance subsequent to Ryan's decision to terminate him is relevant for establishing pretext. Ryan testified that if Keller had come up with a plan and demonstrated some success in achieving it, he (Ryan) might have changed his mind. Keller provided evidence to demonstrate that he had done the preliminary work on some, if not all, of the means of financing that later proved to be successful. In particular, Keller points to evidence that he formulated a plan to achieve Credit Alliance's financing goal. In deposition testimony, Ryan admitted that the steps outlined in the plan provided by Keller were the ones followed by Credit Alliance in successfully raising funds in 1993 and 1994. For example, Keller briefed Ryan about the possibility of asset-backed securitization as a method of raising funds, and it was only months after Ryan 31 decided to fire Keller that Ryan decided to pursue this method. Keller also successfully secured a $100 million private placement which was the first step in improving Credit Alliance's credit rating. Despite Keller's plan and demonstration of success, however, Ryan terminated him. A jury could conclude that Keller played a significant role in Credit Alliance's subsequent ability to reach its funding goal, and that Credit Alliance's claim of poor performance, therefore, was pretextual. Given this evidence, there is a material issue of fact as to whether or not Credit Alliance recognized the economic problems associated with the fundraising and whether or not Keller's performance, therefore, was the reason for his discharge. If a jury were to accept Keller's evidence and interpretation of that evidence, it could reasonably conclude that Credit Alliance did not in fact fire him based upon any dissatisfaction with his ability to raise financing. If a jury were to reject Credit Alliance's proffered reason, it could then reasonably conclude that Keller was terminated based upon his age. Fuentes v. Perskie, 32 F.3d 759, 764 (3d Cir. 1994); see also St. Mary's Honor Center v. Hicks, 509 U.S. 502, (1993). As material issues of fact remain in dispute, summary judgment in favor of Credit Alliance was inappropriate.