Court Opinion

ID: 9482566
Source: CourtListenerOpinion
Date Created: 2023-08-05 08:54:26.172427+00
Date Added: 2024-06-11T17:49:04.578169
License: Public Domain

RESTANI, Judge,
dissenting:
I dissent from the majority’s opinion because I find that plaintiff-appellant, the Equal Employment Opportunity Commission (“EEOC”) has produced sufficient direct evidence of age discrimination to defeat summary judgment.
Although the issue has not been addressed by this Circuit, numerous courts have recognized the correlation between salary, seniority and age, and have held that discharge of more senior and higher-salaried employees as a cost-savings measure constitutes evidence of a violation of the Age Discrimination in Employment Act (“ADEA”), 29 U.S.C. §§ 621-34 (1988). See Metz v. Transit Mix, Inc., 828 F.2d 1202, 1207 (7th Cir.1987). As the Seventh Circuit stated in Metz, “[c]ourts have ... emphatically rejected business practices in which ‘the plain intent and effect ... was to eliminate older workers who had built up, through years of satisfactory service, higher salaries than their younger counterparts.’ ” Id. at 1206 (quoting Leftwich v. HarrisStowe State College, 702 F.2d 686, 691 (8th Cir.1983); see Abbott v. Federal Forge, Inc., 912 F.2d 867, 875 (6th Cir.1990) (seniority is illegitimate basis for employment decisions when it adversely affects older employees); Jardien v. Winston Network, Inc., 888 F.2d 1151, 1157-58 (7th Cir.1989) (replacement of older employee with younger, lower-salaried employee to save salary costs not a defense to ADEA claim); White v. Westinghouse Electric *947Co., 862 F.2d 56, 62 (3d Cir.1988) (discharge to avoid payment of pension benefits relevant to ADEA claim because pension benefits inextricably linked to years of service and age); Geller v. Markham, 635 F.2d 1027, 1034 (2d Cir.1980) (no defense that hiring teachers below certain experience level was necessary as cost-cutting measure), cert. denied, 451 U.S. 945, 101 S.Ct. 2028, 68 L.Ed.2d 332 (1981); Laugesen v. Anaconda Co., 510 F.2d 307, 313 (6th Cir.1975) (discharge based on length of service which is inevitably related to age shows discrimination); but see Williams v. General Motors Corp., 656 F.2d 120, 130 n. 17 (5th Cir.1981), cert. denied, 455 U.S. 943, 102 S.Ct. 1439, 71 L.Ed.2d 655 (1982) (seniority and age discrimination unrelated).1 The regulations implementing the ADEA also prohibit differential treatment based on the cost of employing older workers. See 29 C.F.R. § 1625.7(f) (1991).2
For purposes of summary judgment, it does not require a great leap of imagination to infer from the record in this case that the decisions to terminate the five discharge claimants — Gary Houk, Roosevelt Whittington, Richard Bowman, Robert Herman, and Edna Brown — were based on seniority and salary. In most employment situations, there is a natural correlation between seniority, salary and age. At Clay Printing Company (“Clay”), where there was little employee turnover and the discharge claimants each had between seventeen and forty years of service with the company, the correlation was perhaps greater than average. Because I believe the majority overlooks aspects of the record from which age discrimination could be inferred, the salient facts are set forth here.
The defendant-appellee, Clay, and its owner, Nancy Johnson, retained Ray Scott as a management consultant in July or August 1987. After two visits to the Clay facility and interviews with plant employees, Scott made recommendations for restructuring the company. In his initial recommendations, he stated that the company was overstaffed, and had “approximately 15, and maybe as many as 20 employees too many.” A. 259. He stated that there was too much “dead wood” (A. 264), and “too many people with titles ... doing little or nothing.” A. 259. Scott was given the task of reorganizing Clay with the support of the Board of Directors. The Board made decisions, in part, based on Scott’s recommendations. In the summer and fall of 1987, Clay terminated several senior employees; until that point, Clay had had very little employee turnover. Scott began to play an important role in management at Clay: he visited the company every few weeks; gave instructions to company officials; participated in or made personnel decisions including hiring and firing; and ordered or implemented terminations of some employees.
Shortly after arriving at Clay, Scott requested a list of employees with the starting dates of their employment, current salaries, and dates of their last three raises. Several workers testified that the company posted a list that included the name and seniority date of each employee: lines were *948drawn through the names of employees who were no longer there, and it appeared the company was moving down the list.3 There was some evidence that Scott verbally harassed older workers, and several older employees left because they believed they would be terminated.4 From the outset, Scott expressed dissatisfaction with the seniority of the work force and salaries paid to senior employees. He told Nancy Johnson that “too many people have been here too long and make too much money” (A. 212), and he remarked “if you’ve been here 10 years you've been here too long.” A. 209. He said the company “didn’t have any young blood ... being crossed [sic] trained” and “he was surprised the company was making money.” A. 212. He asked Edna Brown if she would take early retirement, and inquired as to whether Richard Bowman could be retired early. One employee stated that the only problem Scott had with Richard Bowman was that he was paid too much. Another employee heard Scott state in reference to Richard Bowman: “[W]e aren’t going to pay pressman wages to a platemaker.” A. 247. In a memo to the Board of Directors, in which Scott recommends that Roosevelt Whitting-ton become the quality control manager, Scott states: “Unfortunately, this gentleman has over 25 years of experience with the company. If he is not willing to accept this position and be effective at it, I would have to recommend that we ask for his resignation.” A. 265.
Scott was involved in some capacity in the terminations of each of the five discharge claimants. Scott himself terminated Houck, and ordered the termination of Whittington. Bowman and Herman were terminated two weeks after Scott wrote to the company president instructing him to terminate more workers in the production area: the letter states that “it is time to start hiring people that we know are good and la[y] off the gold brickers.” A. 289. Scott and Nancy Johnson asked Edna Brown if she would take early retirement; she refused and a few days later was transferred to the position of Mrs. Johnson’s personal assistant. She was terminated six months later; although Nancy Johnson made the decision to terminate Brown, she discussed it with Scott.
There was also direct evidence that Scott’s dissatisfaction with the salaries paid to senior employees was translated into action. Whittington was fired right after a production meeting which included Scott, Nancy Johnson, and Ned Lutz. Whitting-ton was discharged by Lutz: when he asked why, he was told it was because he made “more money on the floor than anybody else.” A. 642.
Scott was also responsible for changing the employment conditions of the constructive discharge claimants. Originally, these claimants received a salary plus commission. At Scott’s direction, Clay placed them on a flat five percent commission, required them to pay their own business expenses, revoked use of company cars, and required them to sign noncompetition agreements. During this time, Clay hired new sales representatives, at least one was under 40; one witness testified that he believed the new representatives were salaried and it is clear that one new employee was given a company car for a period.
About the time of the terminations, Jerry Helmke, who became vice-president of finance, talked about improving fringe benefits. He stated that if the company improved its benefits package, it could attract *949“newer, younger people and they are more talented.”5 A. 619-620.
Furthermore, Ned Lutz, Clay’s vice-president of operations, conceded in his deposition that seniority and salary were involved in employment decisions:
If a person had been there a good while, they made a higher salary, and so the contention was that our people made too much money, and so they made too much money for what they were producing. So, therefore, their age was involved in that.
A. 523. Lutz also testified that the longer-tenured employees were under more pressure and received fewer raises than the newer employees. Lutz noted that he was referring to tenure, not to age, but seniority and age are correlated.
The majority attempts to discount the discriminatory statements by Scott, Lutz, and Helmke in several respects. First, the majority states that the claimants were unable at their depositions to identify specific evidence of age discrimination. Second, the majority finds Clay’s statistical evidence persuasive. Third, the majority finds the statements age-neutral, or unrelated to a particular employment decision or pattern of decisionmaking.
The first and second reasons are not dispositive on summary judgment when there is conflicting evidence in the record. See EEOC v. Hernando Bank, Inc., 724 F.2d 1188, 1196 (5th Cir.1984) (under Equal Pay Act, proper determination on summary judgment requires more than mere conclu-sional attestation by discriminatees that they are unaware of discrimination); International Brotherhood of Teamsters v. United States, 431 U.S. 324, 340, 97 S.Ct. 1843, 1856, 52 L.Ed.2d 396 (1977) (statistical evidence is subject to rebuttal and usefulness depends on facts and circumstances). The third reason appears to misconstrue critical aspects of the record.
The record indicates that Scott was the prime mover behind the lay-offs at Clay. He was an integral part of management at Clay. He played a direct role in terminations of four of the claimants, and was involved in the decision to reassign and then terminate the fifth claimant. At his direction, the working conditions of the constructive discharge claimants were changed. He voiced dissatisfaction with the seniority of the work force, and there was evidence that Clay was terminating the most senior employees. One of the claimants was told that he was discharged because his salary was higher than that of other employees. Lutz’s deposition testimony confirms the belief at Clay that more senior employees were paid too much in light of their productivity. Scott was the source of many of the discriminatory statements: he was also the animus behind the discharges. For the majority to find that the statements and pattern of decisionmak-ing were unconnected belies the record.
In addition, Scott’s reference to “young blood,” and Helmke’s statement that Clay needed to attract younger employees, have an obvious connection to age, and in light of other evidence in the case, cannot be considered stray comments in the workplace.6 Considering all the evidence in the light most favorable to EEOC, as is required on summary judgment, an issue of fact arises as to whether age was the determining factor in the decisions to terminate. While Clay introduced some evidence that the discharges were based on performance, the court cannot resolve issues of fact on summary judgment.
Likewise, with respect to the constructive discharge claimants, the evidence in this case supports a finding of age discrimination. The sales representatives were stripped of substantial benefits; they were taken off an annual salary and placed on a *950flat commission, and were required to pay their own business and travel expenses. Moreover, they were required to sign non-competition agreements that would impede their ability to find alternate employment if they left the company. Evidence in the record shows new representatives were hired, at least one of whom was under 40, and these representatives received greater benefits. In light of this evidence, and other evidence in the case that indicates age bias, summary judgment should have been denied.
I would reverse and remand for trial.

. Perhaps the majority would find that preventing an employer from cutting costs by terminating higher-paid, more senior employees is an undue interference with business judgment. As one court noted, however, the ADEA strikes a certain balance between employer autonomy and the rights of older employees, which makes such action impermissible:
Congress enacted the ADEA precisely because many employers or younger business executives act as if they believe that there are good business reasons for discriminating against older employees. Retention of senior employees who can be replaced by younger, lower-paid persons frequently competes with other values, such as profits or conceptions of economic efficiency. The ADEA represents a choice among these values. It stands for the proposition that this is a better country for its willingness to pay the costs for treating older employees fairly.
Graefenhain v. Pabst Brewing Co., 827 F.2d 13, 21 n. 8 (7th Cir.1987) (emphasis added) (quoted in Metz, 828 F.2d at 1210) (overruled on other grounds by Coston v. Plitt Theatres, Inc., 860 F.2d 834, 836 (7th Cir.1988)).

. 29 C.F.R. § 1625.7(f) provides:
A differentiation based on the average cost of employing older employees as a group is unlawful except with respect to employee benefit plans which qualify for the section 4(f)(2) exception to the Act.

. Melvin Vinson (age 46), a pressman, stated that he had seen the seniority list, and "it was clear the company was moving down the list, getting rid of the most experienced workers." A. 251. He stated that Scott had singled out older workers for pay decreases or no raises.

. The record reveals that Scott used profanity towards Larry Herman, one of the constructive discharge claimants, and implied he was untrustworthy. Scott asked Howard Little (date of birth 1936), the cameraman at Clay: “What are you still doing here? I thought they would have fired you by now.” A. 230. William Vaughan (date of birth 1935) stated that Scott frequently used profanity towards him and other employees; Vaughan resigned because he believed the company was going to terminate him. Melvin Vinson, age 46, also testified that he resigned because he was sure the company was going to fire him.

. Helmke’s statement was introduced through the deposition of Edward Sipes. Clay argues the statement should be disregarded because it is hearsay, and was made before Helmke joined Clay. The statement shows state-of-mind, and is not hearsay. In addition, the statement was made at a meeting with Clay officials, and the record is unclear as to whether Helmke was a Clay employee at that time.

. The majority finds these comments age-neutral. I question what type of evidence the majority would require before permitting a plaintiff to prevail.