Court Opinion

ID: 768356
Source: CourtListenerOpinion
Date Created: 2012-04-18 09:02:55+00
Date Added: 2024-06-11T17:55:35.146731
License: Public Domain

209 F.3d 687 (7th Cir. 2000)
Christopher J. Michas,    Plaintiff-Appellant,v.Health Cost Controls of Illinois, Inc.,    Defendant-Appellee.
No. 99-2221
In the  United States Court of Appeals  For the Seventh Circuit
Argued January 21, 2000Decided April 6, 2000

Appeal from the United States District Court  for the Northern District of Illinois, Eastern Division.  No. 96 C 5104--Rebecca R. Pallmeyer, Judge.
Before Bauer, Ripple and Kanne, Circuit Judges.
Kanne, Circuit Judge.

1
Christopher Michas brought  suit against his former employer, Health Cost  Controls, Inc. ("HCC"),1 claiming that HCC wrongfully terminated him on the basis of his  age, in violation of the Age Discrimination in  Employment Act ("ADEA"), 29 U.S.C. sec. 621 et  seq. Following discovery, HCC moved for summary  judgment, and the district court granted HCC's  motion. The district court found that Michas had  not made a prima facie case because he failed to  present sufficient evidence that his duties had  been transferred to similarly situated employees  who were not within the protected class and he  failed to present evidence that HCC's reasons for  his dismissal were pretextual. Michas appeals  both decisions. We affirm.

I.  History

2
The district court found that Michas failed to  comply with Local Rule 12(N),2 so the court  made undisputed findings of fact based on HCC's  Local Rule 12(M) submissions. As a threshold  matter, Michas argues that the district court  erred because his statement of additional facts,  filed in accordance with Local Rule 12(N)(3)(b)  and simultaneously with his Rule 12(N)(3)(a)  response, raised genuine issues of material fact  that must be construed in his favor. HCC properly  submitted its Rule 12(M) uncontested findings of  facts, and Michas's Rule 12(N)(3)(a) response to  these facts never accompanied its denials of  HCC's facts with citations to the record. "An  answer that does not deny the allegations in the  numbered paragraph with citations to supporting  evidence in the record constitutes an admission."  McGuire v. United Parcel Serv., 152 F.3d 673, 675  (7th Cir. 1998).

3
That Michas's simultaneous submission of  additional findings of fact might pose a  challenge to these admissions is not relevant to  whether Michas properly filed his Rule  12(N)(3)(a) answer. The purpose of the Rule  12(N)(3) (b) statement is to provide additional  uncontested facts not raised in the movant's Rule  12(M) statement; its purpose is not to provide a  forum to contest facts that should have been  contested in the non-movant's Rule 12(N)(3)(a)  statement. Therefore, we conclude that the  district court did not err in accepting HCC's  statements as uncontested, and we will do  likewise. However, to the extent that facts  included in Michas's Rule 12(N)(3)(b) statement  prove relevant, we will consider these as well as  the admitted facts from the 12(M) statement in a  light most favorable to Michas.

A.  Background

4
In 1963, Michas graduated from law school and  began to work for Montgomery Ward & Co. in its  corporate legal division located in Chicago.  During the course of his employment at Montgomery  Ward, Michas became acquainted with William  Hanley, an attorney employed by Montgomery Ward  in its labor relations department. In the mid-  1960s, Hanley left Montgomery Ward and entered  private practice.

5
In 1991, Montgomery Ward laid off most of its  corporate legal division, preferring instead to  out-source its legal work to the law firm of  Altheimer & Gray. Michas was one of the attorneys  laid off by Montgomery Ward. In March 1992,  Michas met Hanley again and told him that he was  unemployed. Hanley worked as a partner in a  private law firm, and in addition, he had  recently formed a new corporation, HCC. Hanley  referred Michas to a number of private law firms,  but these leads did not pay off. Ultimately,  Hanley introduced Michas to HCC's co-founder and  CEO, John Demaret.

B.  HCC

6
HCC asserts subrogation rights on behalf of  HMOs, health insurance carriers and other health  care plans against parties who may be liable in  tort to insured members of these organizations or  their members. In addition, HCC asserts the  contractual rights of health care organizations  against their members and insureds. HCC was  formed in 1988 by Hanley and Demaret, and during  all relevant periods, Hanley and Demaret were the  principal stockholders of the corporation.  Demaret also served as HCC's president and CEO  and ran the day-to-day operations of the company,  while Hanley was HCC's chairman of the board and  worked primarily on marketing the company.

7
HCC's employees worked as teams. Each team was  composed of attorneys, who acted as supervisors,  and claims adjusters. The teams attempted to  settle claims subrogated to HCC. If these claims  proceeded to litigation, the teams referred the  claims to Demaret who, in turn, generally  referred these claims to outside counsel for the  litigation.

C.  Michas's Employment with HCC

8
Soon after meeting Demaret, Michas began to  work for HCC as a contract attorney. The  relationship initially proved favorable, and in  July 1992, Demaret and Hanley hired Michas to  work full-time as head of HCC's legal department.  The "legal department" consisted of Michas, a  paralegal and a secretary. Michas reported to  Demaret on all matters. Michas's primary job  responsibilities included research, advising  staff on legal issues and acting as liaison to  the outside counsel who handled HCC's core  business of litigation. As a part of this liaison  activity, Michas was responsible for monitoring  the fees charged by outside counsel, and Michas  also helped Demaret manage some of the claims  that outside counsel litigated for HCC.

9
Soon after Michas began to work for HCC,  Demaret became dissatisfied with Michas's work  performance. The parties disagree over the extent  that Michas was informed of this growing  dissatisfaction. HCC has no formal evaluation  procedure, and as a result, much of the evidence  produced about Michas's performance comes from  the parties' deposition testimony. Michas was  given an incremental raise each year and a small  bonus in December 1993. Michas claims that Hanley  and Demaret told him when he was given these  raises that everything was fine with his  performance. Nonetheless, Demaret and Hanley  refused his request for a more substantial raise  in 1994. Demaret, Hanley and one of the team  leaders, Stephen Prazuch, all testified to  Demaret's dissatisfaction with Michas's  performance, and on a number of occasions,  Demaret criticized Michas's performance in short  memos written to Michas.

10
In late 1994, Demaret began to consider ways to  improve the performance of his legal department.  He and Michas discussed expanding the department,  but Demaret ultimately decided against this  strategy. Hanley also asked Michas if he would  prefer to act as a team supervisor. Michas  declined this offer, so HCC hired another  attorney to fill this role. In early 1995, HCC  hired a new chief financial officer, Michael  Neil, a move that raised the fixed costs of the  firm. About the same time, a number of HCC's  larger clients indicated their desire to cut ties  with the company. Faced with rising fixed costs and a potentially precipitous decline in revenue,  Demaret began to consider laying off the legal  department.

11
In April 1995, Neil produced a summary  detailing the costs associated with maintaining  the legal department. The summary showed that HCC  would save $114,697 by dissolving the legal  department, and of this sum, $81,947 would be  saved by Michas's discharge. Armed with these  numbers and the threat of lower revenues, Demaret  convinced an initially hesitant Hanley that the  legal department must be laid off. On April 24,  1995, Hanley and Demaret informed Michas that  they were firing him. Demaret and Hanley told  Michas that they were trying to reduce operating  costs in the face of a potential loss of  important clients. On that date, HCC also fired  the rest of the legal department--the secretary  and the paralegal--along with Michas. The  secretary was a member of the class protected by  the ADEA, which is to say that she was over forty  years old, but the paralegal was not. Michas was  fifty-five years old at the time of his  discharge.

D.  HCC's Later Activities

12
After the legal department was disbanded,  Demaret assumed most of Michas's responsibilities  and delegated the remainder of Michas's duties to  the team supervisors. Demaret is older than  Michas and a member of the protected class, but  some of the team supervisors who assumed Michas's  responsibilities were not members of the  protected class.

13
About the same time that HCC laid off its legal  department, HCC was approached by a venture  capital firm, JMI, which was interested in  purchasing the company. As a part of the deal,  JMI requested that HCC hire consultant John  Blaney, who has since become president of the  company. Blaney was hired on April 25, 1995, the  day after Michas's discharge, at a salary of  $180,000 per year. Negotiations over the purchase  progressed through mid-1995, and in July, Demaret  decided that he again needed an in-house  attorney. Demaret wanted the new attorney to  manage outstanding cases, so that he could focus  on preparing HCC to be sold. Thus, the new  attorney would assume a role similar in many  respects to the role Michas served before his  discharge.

14
HCC initially offered the job to Prazuch, a  team leader. Prazuch was not a member of the  protected class. Prazuch initially accepted the  offer, but after further consideration, he  decided to refuse. Instead, in October 1995, HCC  hired Henry Romano as corporate counsel. Romano  assumed most of Michas's previous functions, as  well as many functions that had never been  delegated to Michas. Romano was a member of the  protected class. In late 1995, JMI completed the  purchase of a majority of HCC's outstanding  stock. For this reason, Demaret no longer  maintains an active role in the company. Most of  the case management duties once performed by  Demaret are now handled by Romano, who has  assumed the position of corporate counsel.

15
Soon after his discharge, Michas filed a  complaint against HCC in district court, claiming  that HCC had violated the ADEA by discharging  him. The parties proceeded through discovery, and  at its close, HCC moved for summary judgment. HCC  claimed that Michas could not make a prima facie  case for age discrimination because he was not  replaced by someone outside the protected class  and because he could not prove he was performing  to HCC's legitimate expectations. In addition,  HCC claimed that it had two legitimate reasons to  terminate Michas: his subpar performance and its  need to cut costs. Because Michas failed to  comply with Local Rule 12(N)(3)(a), the district  court accepted HCC's uncontested statement of  facts as true. On these facts, the court found  that Michas could not make out a prima facie  case, nor could he show that HCC's reasons for  discharging him were pretextual. Therefore, the  district court granted HCC's motion for summary  judgment.

II.  Analysis

16
On appeal, Michas argues that the district  court erred in finding that the evidence, even  when weighed in his favor, failed to raise  material questions of fact. First, Michas argues  that he included sufficient evidence that his  position remained open and he was performing  adequately to make a prima facie case against  HCC. Second, he argues that he presented evidence  sufficient to demonstrate that HCC's articulated  legitimate non-discriminatory reasons for  terminating him were pretextual.

17
We review de novo the district court's grant of  summary judgment, drawing conclusions of law and  fact from the record before us. See Feldman v.  American Memorial Life Ins. Co., 196 F.3d 783,  789 (7th Cir. 1999). Summary judgment is proper  when "the pleadings, depositions, answers to  interrogatories, and admissions on file, together  with the affidavits, if any, show there is no  genuine issue as to any material fact and that  the moving party is entitled to a judgment as a  matter of law." Fed. R. Civ. P. 56(c); see also  Celotex Corp. v. Catrett, 477 U.S. 317, 322-23  (1986). In determining whether any genuine issue  of material fact exists, we must construe all  facts in the light most favorable to the non-  moving party and draw all reasonable and  justifiable inferences in favor of that party.  See Anderson v. Liberty Lobby, Inc., 477 U.S.  242, 255 (1986). "A genuine issue for trial  exists only when a reasonable jury could find for  the party opposing the motion based on the record  as a whole." Pipitone v. United States, 180 F.3d  859, 861 (7th Cir. 1999) (citation omitted).

18
We apply the summary judgment standard with  special scrutiny to employment discrimination  cases, which often turn on the issues of intent  and credibility. See Bellaver v. Quanex Corp.,  200 F.3d 485, 491 (7th Cir. 2000); Geier v.  Medtronic, Inc., 99 F.3d 238, 240 (7th Cir.  1996). However, neither "the mere existence of  some alleged factual dispute between the  parties," Anderson, 477 U.S. at 247, nor the  existence of "some metaphysical doubt as to the  material facts," Matsushita Elec. Indus. Co. v.  Zenith Radio Corp., 475 U.S. 574, 586 (1986),  will defeat a motion for summary judgment.

A.  Michas's Prima Facie Case

19
The ADEA makes it unlawful "to fail or refuse  to hire or to discharge any individual or  otherwise discriminate against any individual .  . . because of such individual's age." 29 U.S.C.  sec. 623(a)(1). We will find an ADEA violation  when a plaintiff presents evidence that  demonstrates that age was a "determining factor"  in a discharge decision. See Smith v. Great Am.  Restaurants, Inc., 969 F.2d 430, 434 (7th Cir.  1992) (citations omitted). A plaintiff pursuing  an ADEA claim has two ways to make such a prima  facie case. Either he can present direct evidence  that age was a determining factor in his  discharge, see Cowan v. Glenbrook Sec. Servs.,  Inc., 123 F.3d 438, 443 (7th Cir. 1997), or he  can present indirect evidence to demonstrate that  the employment decision "was motivated by the  employer's discriminatory animus." Bellaver, 200  F.3d at 492.

20
Michas presents no direct evidence that his age  was a determining factor in his discharge and  attempts to make a prima facie case by  circumstantial evidence. Because he presents no  direct evidence of discriminatory animus, Michas  must rely on the inferences that we may draw from  indirect evidence. The traditional test for  determining workplace discrimination by indirect  evidence requires the plaintiff to make a prima  facie case of discrimination, then shifts the  burden of producing evidence of a legitimate non-  discriminatory motive to the defendant. See  McDonnell Douglas Corp. v. Green, 411 U.S. 792,  802 (1973); see also Baron v. City of Highland  Park, 195 F.3d 333, 338 (7th Cir. 1999) (applying  McDonnell Douglas burden-shifting analysis to  ADEA claims). If the defendant provides a  legitimate motive for termination, the burden  shifts again to the plaintiff to provide evidence  that this motive was pretextual. See id.

21
Under the traditional McDonnell Douglas test,  the plaintiff is required to present evidence on  four prongs to make a prima facie case. He must  show that (1) he is a member of a protected  class, (2) he reasonably performed to his  employer's expectations, (3) he was subject to an  adverse employment action and (4) the position  remained open. See McDonnell Douglas, 411 U.S. at  802. However, recognizing the variety of adverse  employment actions covered within the broad reach  of the discrimination statutes, we have adapted  the requirements for making a prima facie case in  special cases to reflect the reality of the  workplace. See Bellaver, 200 F.3d at 494. Here,  the parties agree that Michas's termination  constitutes a special case, but they differ in  their description of the type of case presented  and in the requirements that must be met to make  a prima facie case.

22
HCC argues that Michas's termination was a part  of a reduction in force ("RIF"). A RIF occurs  when an employer permanently eliminates certain  positions from its workforce. See id. Because the  employer has removed a position entirely, the  position will never be refilled. In such a case,  it makes little sense to require a plaintiff to  meet the fourth prong of the McDonnell Douglas  test, in which the plaintiff must demonstrate  that the position remained open or was filled by  someone who is not a member of the protected  class. Instead, we require a plaintiff to  demonstrate that other similarly situated  employees who were not members of the protected  class were treated more favorably. See id.

23
To prove discrimination in a RIF, Michas must  prove that there were "similarly situated"  younger employees who were treated more favorably  than he was. To make this proof, Michas first  must have shown that his position was "similarly  situated" with younger employees who were not  terminated. The district court found that Michas  presented no evidence that his job was fungible  with the younger team leaders who were not  terminated. For this reason, the court found no  genuine issue of material fact about whether  "similarly situated" individuals were treated  better than Michas.

24
Michas seeks to recharacterize his termination  not as a true RIF, but as a case of what this  circuit has dubbed a "mini-RIF." See Bellaver,  200 F.3d at 495. In a mini-RIF, a single employee  is discharged and his position is not filled.  However, the employee's responsibilities are  assumed by other members of the corporate  workforce. See Gadsby v. Norwalk Furniture Corp.,  71 F.3d 1324, 1331 (7th Cir. 1995). Because of  the fear that employers might misuse the RIF  description to recharacterize ordinary  terminations as reductions in force when they  terminate an individual with a unique job, we  have dispensed with the requirement that the  plaintiff show "similarly situated" employees who  were treated more favorably. Instead, because the  fired employee's duties are absorbed by other  workers and the employee was "'replaced,' not  eliminated," we only require that a plaintiff  demonstrate that his duties were absorbed by  employees who were not members of the protected  class. See Bellaver, 200 F.3d at 495.

25
Ultimately, calling an adverse employment action  a "mini-RIF" merely emphasizes that McDonnell  Douglas, rather than the RIF test, should apply.  In both the traditional McDonnell Douglas  analysis and the mini-RIF analysis, the  discharged employee's duties are assumed by other  employees (or in the mini-RIF scenario, the  position is absorbed by other employees); in the  RIF context, the employer no longer needs the  discharged employee's duties performed. Thus, our  decision whether an action is a RIF depends on  whether HCC still needed Michas's job  responsibilities to be performed. Even though HCC  discharged multiple employees at the time it  discharged Michas, HCC's own evidence  demonstrates that HCC still needed someone to  perform Michas's responsibilities and that  Demaret intended, at the time of Michas's  discharge, to perform them. Because Michas's  responsibilities were absorbed and not  eliminated, we will apply the McDonnell  Douglas/mini-RIF standard.

26
Under McDonnell Douglas, Michas needed to  present evidence that his position was absorbed,  not eliminated to meet this aspect of his prima  facie case. In its findings of fact, the district  court accepted HCC's statement that Michas's  responsibilities were assumed by Demaret. This  evidence is sufficient to create a genuine  question of fact as to whether Michas met the  fourth prong of the McDonnell Douglas test.  Therefore, had the district court granted summary  judgment on this basis alone, we would find that  the court erred in its grant of summary judgment.

27
The district court also found that Michas  failed to make a prima facie case because he  failed to present sufficient evidence that he was  performing to HCC's expectations. HCC blames  Michas's discharge, in part, on Michas's subpar  performance. Because of the overlap between this  element of Michas's prima facie case and his  claim of pretext, we will analyze the dispute  over Michas's performance within the context of  HCC's grounds for discharge. However, we will  discuss the district court's analysis of this  only if we determine that HCC's other claim, that  it discharged its legal department in an effort  to reduce costs, was pretextual. The district  court found that Michas presented no evidence to  refute HCC's claimed legitimate non-  discriminatory motive. Michas contends that he  produced evidence sufficient to create a genuine  issue of fact that these claims were pretextual.

B.  Pretext

28
When a plaintiff presents facts that constitute  a prima facie case of discrimination, a  presumption of discrimination arises, and the  burden shifts to the defendant employer to  present a legitimate non-discriminatory motive  for the adverse employment action. See Testerman  v. EDS Technical Products Corp., 98 F.3d 297, 302  (7th Cir. 1996). If the defendant proffers such  reasons, "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 Dep't of  Community Affairs v. Burdine, 450 U.S. 248, 253  (1981). "A plaintiff can establish pretext by  showing either that a discriminatory reason more  likely motivated the employer or that the  employer's explanation is unworthy of credence."  Chiaramonte v. Fashion Bed Group, Inc., 129 F.3d  397, 398 (7th Cir. 1997).

29
HCC argues that its decision to discharge him  was economically motivated. Michas contends that  this explanation is incredible and presents facts  that he believes raise a question of fact about  HCC's credibility. He contends that because HCC  considered expanding the legal department only  six months before laying it off and because HCC  hired three new employees in the period directly  preceding his discharge, HCC could not have been  in the financial pickle that it claimed. Michas  also notes that on the day after he left, HCC  hired a consultant at a salary of $180,000 per  year and that HCC's net income remained constant  despite all these additional expenses.

30
All these facts tend to suggest that HCC was  not in dire financial straits when it decided to  eliminate its legal department. However, HCC does  not contend that it was financially desperate.  The company merely claims that it faced a large  loss in revenue and rising fixed costs. Because  of these financial factors and the desire to put  its financial house right pending its  acquisition, HCC decided that its financial  interests would best be served by reducing  expenses in departments considered extraneous.  HCC presents evidence to support this claim,  including deposition testimony of the threat of  lost business (although only one of the three  clients considering leaving actually left),  stagnant net income for 1995 despite a 25 percent  increase in gross revenues and testimony about  HCC's need to cut costs in the face of a  potential acquisition.

31
To show pretext, Michas must present evidence  from which we may infer that HCC did not, at the  time of his discharge, honestly believe the  reason they gave for firing him. See McCoy v. WGN  Continental Broadcasting Co., 957 F.2d 368, 373  (7th Cir. 1992). Michas provides no evidence that  HCC did not believe that it needed to cut costs  where it could. Instead, Michas again wishes us  to infer from the circumstantial evidence that a  seemingly legitimate business decision was based  on discriminatory motive. In the absence of any  direct evidence, however, we will not second-  guess the business decisions made by an employer.  See Wolf v. Buss (America) Inc., 77 F.3d 914, 920  (7th Cir. 1996). Michas claims that this business  decision was motivated not by a decision to cut  costs, but by discriminatory animus. However, he  presents no evidence of such animus, nor any  evidence that would tend to disprove that HCC was  motivated by a desire to cut costs. We find that  Michas has failed to present evidence sufficient  to create a genuine question of material fact  whether HCC's legitimate business motive for  dissolving his department was pretextual.

32
HCC also argues that its decision to discharge  Michas in part was based on his subpar  performance. This argument may be considered an  alternative motive for Michas's termination, or  it may merely have been provided to explain why  the legal department was chosen to be dissolved  as a cost cutting measure. Nevertheless, we need  not address the question whether Michas's  performance met HCC's expectations or was a basis  for his discharge. Michas has not produced  evidence sufficient to create a question of fact  as to whether HCC's decision to terminate its  legal department was pretextual. Therefore, we  find no error in the district court's grant of  summary judgment on this ground.

III.  Conclusion

33
Because Michas failed to present evidence  sufficient to create a question of fact as to  whether HCC's reasons for discharging him were  pretextual, we find that the district court did  not err in granting defendant HCC's motion for  summary judgment. Therefore, the decision of the  district court is AFFIRMED.

Notes:

1
 Although the named party to the suit is Health  Cost Controls of Illinois, Inc., this corporation  is a shell subsidiary of Health Cost Controls of  America, Inc. Health Cost Controls of Illinois  has no employees and could not have been  responsible for the actions claimed by Michas.  Because Michas was actually employed by Health  Cost Controls of America, Inc., we will refer to  Health Cost Controls of America, Inc. ("HCC") as  the defendant to this action.

2
 Local Rule 12(N) requires the non-movant to  submit a response to the movant's Local Rule  12(M) submission of uncontested facts "to each  numbered paragraph in the moving party's  statement, including, in the case of any  disagreement, specific references to the  affidavits, parts of the record, and other  supporting materials relied upon." United States  District Court for the Northern District of  Illinois Local General Rule 12(N)(3)(a). Local  Rule 12(M) requires the movant to submit with its  motion for summary judgment "a statement of  material facts as to which the moving party  contends there is no genuine issue and that  entitle the moving party to a judgment as a  matter of law." N.D. Ill. Local Rule 12(M)(3).  Local Rule 12(N)(3)(b) also allows the non-movant  to supplement the record with a statement of  additional facts that require a denial of summary  judgment. Local Rule 12(N) states that "[a]ll  material facts set forth in the statement  required of the moving party will be deemed to be  admitted unless controverted by the statement of  the opposing party." N.D. Ill. Local Rule  12(N)(3)(B).