Opinion ID: 2994594
Heading Depth: 3
Heading Rank: 3

Heading: Exclusion of Wertheimer Reports

Text: We are now in a position to consider whether, under the Daubert standards, the statistical evidence plaintiffs have offered in the two cases before us (coupled with the other evidence they presented) was sound enough methodologically (i.e., reliable enough) and relevant, such that the district court should have taken it into account in evaluating their claim. Several points are important to bear in mind. First, the question before us is not whether the reports proffered by the plaintiffs prove the entire case; it is whether they were prepared in a reliable and statistically sound way, such that they contained relevant evidence that a trier of fact would have been entitled to consider. No one piece of evidence has to prove every element of the plaintiffs’ case; it need only make the existence of any fact that is of consequence more or less probable. See Fed. R. Evid. 401 (emphasis added). See also, e.g., United States v. Porter, 881 F.2d 878, 887 (10th Cir. 1989) (’An item of evidence, being but a single link in the chain of proof, need not prove conclusively the proposition for which it is offered. . . . It is enough if the item could reasonably show that a fact is slightly more probable than it would appear without that evidence. . . . A brick is not a wall.’), quoting McCormick on Evidence, sec. 185 at 542-43 (E. Cleary 3d ed. 1984) (footnotes omitted). Put a little differently, the issue is whether the criticisms of the Wertheimer reports and the plaintiffs’ other statistical evidence affected the admissibility of those materials, or only, as the Supreme Court put it in Bazemore, their probativeness or weight. Second, the question before the district court, and before us on de novo review from the summary judgments, is not whether we find one set of expert reports more persuasive than another. See Casey v. Uddeholm Corp., 32 F.3d 1094, 1099 (7th Cir. 1994); Roberts v. Sears, Roebuck & Co., 723 F.2d 1324, 1338 (7th Cir. 1983). It is whether, taking the facts in the light most favorable to the plaintiffs, a trier of fact should be permitted to make that choice. Third, embedded within the debate about the relative merit of the plaintiffs’ versus the defendants’ experts are a number of factual issues. One is the same kind of question that concerned the Supreme Court in Hazelwood: what is the proper level of aggregation or disaggregation at which ASI’s and Indiana Bell’s actions should be assessed? At one extreme, one could perhaps look at the two companies’ entire workforces, management and non-management alike; at the other extreme, one could take a highly individualistic view of humanity and conclude that no two people are exactly alike and statistics are therefore worthless. Neither approach has much to recommend it, of course, but the thought experiment suggests the outer possibilities. What Wertheimer did, briefly put, was to examine the correlations that existed between the ages of employees and the companies’ decisions to terminate. What he did not do (and, as far as we can tell, what the defendants’ experts did not do either) was to run a multiple-regression analysis that would have isolated the relevance of age as a factor in the companies’ decisions. While this omission strikes us as odd, we are not prepared to hold as a matter of law that nothing but regression analyses can produce evidence that passes the Daubert and Kumho Tire thresholds. Statisticians might have good reasons to look at data in different ways. (For example, as additional variables are introduced into a regression, the less likely it is that any of them will be statistically significant, a fact that causes its own problems.) We thus evaluate here what Wertheimer did, rather than hypothetical tests that he or another expert might have done. In the ASI reports, Wertheimer initially grouped all management employees together and did an aggregated study, while the defendants’ expert focused on each particular CRESP group, even though some of those groups were as small as 30 people. Next, in his rebuttal report, Wertheimer looked at groups across the 13 vice- presidential groupings, which (according to defense expert McCabe) reflect[ed] the different activities that are the responsibilities of these vice presidents. Also in the rebuttal report, Wertheimer both criticized the CRESP groups as being too small to serve as meaningful sets for analysis, and he pointed out that even a CRESP- oriented analysis showed significantly higher selection rates for terminations of older workers. Finally, in a declaration that also addressed McCabe’s conclusions, Wertheimer analyzed the data by salary group, looking particularly at Stage 1 of the process. We summarize here Wertheimer’s findings at each of those levels. After making some comparisons between the age profile of ASI’s workforce as a whole and that of the entire country (which we do not find particularly useful and thus disregard), he calculated the termination rates of employees by age. He did this by dividing the number of terminated workers in each age category by the number of workers in that category before the terminations. The results for the November 1992 terminations were as follows: Age < 30: 6.2% Age 45-49: 12.6% Age 30-34: 9.9% Age 50-54: 12.5% Age 35-39: 9.9% Age 55-59: 9.5% Age 40-44: 10.5% Age 60-64: 26.3% Table D-2, Wertheimer Report. Another way he reviewed the same data was to compare the share of terminations accounted for by employees at least age 40 with the share of the under-40 group: the former accounted for 62.6% of the 1992 terminations, even though they were only 58.1% of the workforce. For the 1993 terminations, the differences were greater: employees at least 40 accounted for 79.3% of the terminations, but only 61.3% of the workforce. Last, in this report he considered the way that the selection process worked to see how the designation of the at risk employees in Stage 1 and the termination candidates at Stage 2 correlated to age. At Stage 1, the selection rate for the under-40 employees was 28.6%, and for the older employees it was 35.3%; at Stage 2 the selection rate for the younger group was 38.1%, compared with 46.7% for the older employees. These differences exceeded two standard deviations and, Wertheimer concluded, were thus statistically significant. (By that, he meant that the probability that the difference would have been observed even if the hypothesis being tested were false is less than 5%. Most likely, some other factor--perhaps age, perhaps something else correlated to age--explains at least some of the difference.) Perhaps, however, there were non-age-related differences among the management employees as a whole that should have been taken into account, as McCabe argued. Recall that ASI and Indiana Bell defined management very broadly, to include practically all white-collar workers. Wertheimer’s rebuttal report was also before the district court. In it, he criticizes McCabe’s use of CRESP groups on the ground that at least many of them were too small to yield useful information. He pointed out that 69.6% of the CRESP groups had fewer than 50 employees. When samples are that small, he argued, it is hard to find statistically significant differences between two selection rates. (This statement necessarily assumes that the smaller groups are not the appropriate reference groups; a large group cluttered with too many unlike individuals is not preferable to a smaller group of similarly situated people.) Wertheimer opined that one would need at least 300 employees in a CRESP group to be confident that useful information about the Stage 1 selection rate for older employees could be detected. (Aside from reflecting the truism that it is always better to have more data than less, this comment does not tell the full story; there are statistical techniques that can be used for small samples, although neither Wertheimer nor the defendants’ experts appear to have used them.) Only four CRESP groups met Wertheimer’s preferred size criterion. Wertheimer’s rebuttal also analyzed the selection rates for employees by vice- presidential group and by age within each group. That exercise showed that selection rates were higher for managerial employees at least age 40 in 12 out of the 13 groups. The difference was statistically significant in six of those 12 categories, in the sense that there was a small (less than 5%) probability that the difference was due to chance. His later declaration did much the same thing, using salary groups instead of vice presidential groups. Wertheimer’s work on the Indiana Bell reports was similar. Initially, he analyzed the managerial workforce as a whole and found that a disproportionate number of older managers were selected for termination. Once again, in a rebuttal report he criticized the fragmentation he found in the McCabe study, which for Indiana Bell subdivided the employees in question into salary grades and some sub-grades, and then made seven comparisons for each group. Again, this led to very small groups and subgroups, with 28% containing fewer than 10 employees. In Wertheimer’s view, the final result of the Indiana Bell process was the proper focus. He also analyzed the selection rates of the Indiana Bell managers by overall salary grade level, however, looking at the end result for each salary grade rather than after each of the seven steps along the way to determining who would be let go. This process showed that age correlated with the results. In the SG1 group, no employees below age 40 were selected for termination, while 25% of those 40 and above were selected. This difference was also statistically significant, in the sense that it meant that there was less than a 5% chance that it was explainable by chance. There is far more detail in the record, but this description is enough to give an idea of what Wertheimer was doing. The district court found his reports inadmissible for several reasons: (1) the underlying information about the RIF programs was not reliable; (2) the reports only showed that the difference in treatment between the over and under 40 aged individuals was not due to chance, but they did not affirmatively indicate what caused that difference; (3) the analysis did not take into account or control for other non-age related variables; (4) Wertheimer relied on the plaintiffs’ description of the RIF and did not himself become familiar with the procedures used; and (5) the jury would find the reports so confusing that they should be excluded under Rule 403. The underlying information about the RIF came from the defendants ultimately, and as such we see no problem in Wertheimer’s decision to rely on it. Nor do we see anything wrong in the way Wertheimer familiarized himself with the process. The more serious objections the court had were its second, third, and fifth. The theme of numbers two and three was that Wertheimer’s analysis, standing alone, was not enough to show that age was the reason why ASI and Indiana Bell took the actions that they did. That much is true: the statistical analyses were enough to rule out chance, but the real reason for the decisions may have been age or it may have been some other factor or factors positively correlated with both advancing age and the likelihood of termination. But ruling out chance was an important step in the plaintiffs’ proof, even if it was not a single leap from the starting line to the finish line. If this is all the plaintiffs had introduced, we would agree with the district court that the record would have supported summary judgment against them. It was not, however, and in our view the other items of evidence, if believed by a jury, could have done the rest of the job: that is, it could have ruled out factors other than age. Importantly, however, the other factor cannot itself be something that is a euphemism or proxy for age discrimination. Morris’s assumption that people over 40 are already working in the highest job they will ever reach could be viewed by a trier of fact as just such a stereotype. A trier of fact might conclude that it and its analogues- -advancement potential and growth potential-- infected the process of determining who would be terminated in the downsizing, meaning that covert age discrimination was at play. (Taking the inferences from this statement in the light most favorable to the plaintiffs, it reflected Morris’s ex ante assumption that older people have no growth potential; we realize that a trier of fact might also construe it as an innocuous ex post observation that there is a correlation between people whose growth potential has been exhausted and older workers, but at this stage we cannot draw inferences in favor of the party moving for summary judgment.) The disputes that the parties have highlighted between Wertheimer and McCabe (and among the other experts on both sides) went to the weight of the evidence each was presenting, not to its admissibility. Once Wertheimer was analyzing vice presidential groups or salary groups, he was talking about people sufficiently similarly situated that general conclusions could be drawn. Indeed, this is exactly what ASI and Indiana Bell argue when they challenge the district court’s decision that the waivers certain employees signed did not comply with the OWBPA. The district court found the waivers invalid in part because the waivers referred only to the salary grades of individuals eligible for or selected for the termination program, not their precise job titles. The specificity of job titles was necessary given the purpose of that statute, according to the district court. ASI and Indiana Bell objected, defending the utility of the salary grade information. So, at least in some contexts, even the companies believed that salary grades were the appropriate groupings to use. Last, we address the district court’s alternative ruling that the statistical evidence should be excluded under Fed. R. Evid. 403. We would be more receptive to this possibility if it were not for two problems. First, while it is not unheard of to exclude evidence under Rule 403 at the summary judgment stage, see, e.g., Weit v. Continental Illinois Bank & Trust Co., 641 F.2d 457, 467 (7th Cir. 1981), normally the balancing process contemplated by that rule is best undertaken at the trial itself. Second, we simply cannot tell from this distance whether the court’s Rule 403 decision would have been the same or not, if it had recognized the limited but important role the plaintiffs’ statistics could play. As the court reconsiders the case on remand in accordance with this opinion, and particularly if the case goes forward to a trial, it will be free to re-weigh the admissibility question under Rule 403 and come to a fresh conclusion. In the short term, however, it must also bear in mind that the Supreme Court’s recent decision in Reeves was a cautionary note not to grant summary judgment too readily when facts are susceptible to two interpretations, and not to dismiss as irrelevant damaging remarks like the one there (plaintiff so old he must have come over on the Mayflower, 120 S. Ct. at 2110), or, in our case, Goetz’s proclaimed desire to hire people under the age of 45. The appeal we have before us, we reiterate, came from a decision to grant summary judgment. We do not rule out the possibility that either or both companies will be able to prevail before a trier of fact. We hold only that this evidence met the standards of admissibility set by the Federal Rules of Evidence and thus should have been counted on plaintiffs’ side for summary judgment purposes.