Court Opinion

ID: 153352
Source: CourtListenerOpinion
Date Created: 2010-08-14 03:36:17+00
Date Added: 2024-06-11T15:01:12.251292
License: Public Domain

PUBLISH

                        UNITED STATES COURT OF APPEALS
Filed 5/1/96
                                   TENTH CIRCUIT

 ROBERT S. FURR, LESLIE WOOSLEY,
 BERNARD E. OZINGA,

        Plaintiffs - Appellees,                             No. 95-6181
 vs.

 SEAGATE TECHNOLOGY, INC.,

        Defendant - Appellant.

               APPEAL FROM THE UNITED STATES DISTRICT COURT
                  FOR THE WESTERN DISTRICT OF OKLAHOMA
                            (D.C. No. CIV-93-939-R)

Gary C. Pierson (Tony G. Puckett and Rochelle L. Huddleston with him on the brief), of
Lytle Soulé & Curlee, Oklahoma City, Oklahoma, for Defendant-Appellant.

Mark Hammons of Hammons & Associates, Oklahoma City, Oklahoma, for Plaintiffs-
Appellees.

Before BALDOCK, McWILLIAMS and KELLY, Circuit Judges.

KELLY, Circuit Judge.

       Plaintiffs-Appellees Robert S. Furr, Leslie Woosley, and Bernard E. Ozinga allege

that their employment with Defendant-Appellant Seagate Technology, Inc. was

terminated because of their age in violation of the Age Discrimination in Employment
Act (“ADEA”), 29 U.S.C. §§ 621-34, and Oklahoma public policy.1 The case was tried

to a jury, which returned a verdict in favor of the Plaintiffs. Seagate filed a motion for

judgment as a matter of law or a new trial, which was denied by the district court. This

appeal followed.

                                        I. Background

       Seagate designs, manufactures and markets hard disk drives for computer systems.

It has plants in 17 countries and over 30,000 employees worldwide. Seagate commenced

operations in Oklahoma City on October 1, 1989, after purchasing an existing facility

from another disk drive company. The Oklahoma City plant employed approximately

2,000 people.

       In June 1991, Seagate’s senior management determined that certain cost-

containment measures would have to be taken to address an anticipated decline in profit

margins. These measures included a company-wide reduction-in-force (“RIF”). The RIF

was not undertaken as a desperate measure, but rather as a strategic business decision

aimed at improving the company’s position in the highly competitive hard disk drive

market.

       The initial RIF occurred in July 1991, with a second, smaller RIF in August 1991.

       1
               Plaintiffs concede that the intervening case of List v. Anchor Paint Manufacturing
Co., 910 P.2d 1011 (Okla. 1996), disallows their state law claims. In List, the Oklahoma
Supreme Court held that Oklahoma does not recognize a wrongful discharge claim predicated on
Oklahoma public policy where the plaintiff has a statutory cause of action. Id. at 1013.

                                              -2-
Approximately 1,200 employees were laid off from Seagate nationwide, including fifty-

four from Oklahoma City.

       Plaintiffs Furr, Woosley, and Ozinga were employed by Seagate at its Oklahoma

City plant, and all three were ultimately selected for the RIF. All three worked in separate

departments in a hierarchy of about 240 employees called Design Engineering headed by

vice-president Miran Sedlacek. Design Engineering included a variety of diverse talents

and disciplines, and the three Plaintiffs worked for different managers and performed

vastly different jobs.

       Mr. Furr, 53, was a senior drafter who performed electrical drafting. James Becker

was Furr’s immediate supervisor. Mr. Becker reported to Bill Diffin, Director of

Engineering Services, who in turn reported to Mr. Sedlacek.

       Mr. Woosley, 58, was an engineering support specialist who worked in the photo

lab, photocopying artwork master prints for other employees to use in making printed

circuit boards. Stan Young was Mr. Woosley’s immediate supervisor. Mr. Young, like

Mr. Becker, also reported to Mr. Diffin.

       Mr. Ozinga, 62, was a senior consulting mechanical engineer who worked on the

mechanical areas of disk drive design. David West, Director of Advanced Technology

and Concepts, was Mr. Ozinga’s immediate supervisor, and Mr. West reported directly to

Mr. Sedlacek.

        In early July, 1991, Mr. Sedlacek was informed about the planned RIF and was

                                            -3-
told that the reduction would be 15% for his organization. Mr. Sedlacek called a meeting

of the five directors under him, including Mr. Diffin and Mr. West, and instructed them to

cut 15% of the employees in their respective groups. Mr. Sedlacek did not tell his

directors who to select, nor did he personally select any employees for the RIF.

       After the directors talked to their managers, and the managers and supervisors

made their selections, Mr. Sedlacek held two meetings with all of his directors to discuss

their selections. The focus of these meetings was to ensure that the functions selected

would cause the least harm to the company.

                                 A. Mr. Furr’s Selection

       After meeting with Mr. Sedlacek, Mr. Diffin met with the five managers under

him, including Mr. Becker and Mr. Young, to inform them of the RIF. Mr. Diffin

explained that each department would still have the same amount and type of work after

the RIF and instructed his managers to select those that would least harm their

department’s ability to continue their operations. Each manager was required to select

only employees from his own department. Mr. Diffin informed Mr. Becker that he would

have to select two employees for the RIF.

       Mr. Becker supervised 14 employees, 9 engineers and 5 technicians. He

determined that his two selections had to be from the technicians because the engineers

could perform the work of the technicians, but the converse was not true. Mr. Becker

                                            -4-
then examined the tasks that each of the technicians was performing. Two were

preparing printed circuit board layouts, another was performing several tasks, including

new document production and photo lab and microfilm backup, and Mr. Furr and another

technician, Modesto Adoptante, 58, were making engineering change orders and updating

upgrades. In order to maintain people performing all of the various tasks, Mr. Becker

selected one of the two technicians preparing circuit board layouts for the RIF and

selected Mr. Furr over Mr. Adoptante. Mr. Becker testified that the selection decision

was entirely his and that he kept Mr. Adoptante because he felt Mr. Adoptante was more

productive than Mr. Furr. Mr. Becker based his selections exclusively on job elimination

and productivity. After his layoff, Mr. Furr’s job duties were performed by Mr.

Adoptante and later absorbed by others in Mr. Becker’s group; no one was transferred

into Mr. Furr’s former position or hired to take his place.

                                B. Mr. Woosley’s Selection

       Mr. Young also learned of the RIF in the early July meeting with Mr. Diffin, and

Mr. Diffin told Mr. Young that he would have to select one person for the RIF. Mr.

Young selected a temporary employee who would eventually depart anyway. It was

unclear at the time whether the termination of a temporary employee would count toward

the RIF requirements. Although the temporary employee was approved for the July RIF,

Mr. Young reviewed his department to determine who he would pick if another selection

                                            -5-
was necessary.

       Mr. Young’s department consisted of nine employees, including the temporary.

Three were scientists with degrees in chemistry; three employees, including the

temporary, worked in the SMT lab; one independently operated the printed circuit lab;

one maintained the specialized inventory of components used in the engineering

department; and Mr. Woosley ran the photo lab. Mr. Young determined that the

scientists, with their specialized knowledge, were indispensable, as were the employees

operating the printed circuit lab and maintaining the specialized inventory. Mr. Young

did not think that he could operate the SMT lab with only a single person (after losing the

temporary), making the two remaining SMT lab employees vital. Thus, Mr. Young

reasoned that Mr. Woosley was the next most expendable individual, behind the

temporary, especially because other people under Mr. Diffin’s management umbrella

could, and had, performed Mr. Woosley’s job in the photo lab.

       Shortly after the July RIF, Mr. Diffin called a meeting of his managers, including

Mr. Young, and announced that the group needed to lose another person. Mr. Diffin told

Mr. Young that his department would lose the additional person, and Mr. Young agreed

with that decision because every other department under Mr. Diffin had lost a permanent

employee while he had only lost a temporary. Mr. Young selected Mr. Woosley, focusing

exclusively on position elimination. Mr. Woosley’s photo lab position was eliminated,

although the photo lab duties still needed to be performed. A four-person, weekly

                                           -6-
rotation was set up to handle Mr. Woosley’s former photo lab responsibilities, and this

rotation system lasted two years. No one was hired into Mr. Woosley’s former position.

                               C. Mr. Ozinga’s Selection

      Mr. West, Mr. Ozinga’s manager, first learned of the RIF at the early July meeting

with Mr. Sedlacek. Mr. West’s organization consisted of eight specialized departments

and developed integrated circuits. The technical employees in Mr. West’s group were all

electrical engineers, except Mr. Ozinga who was a mechanical engineer. Mr. Ozinga and

one other consulting engineer reported directly to Mr. West.

      Mr. West attempted to determine which specialities could be selected that would

least impact his organization. He met with his managers and developed a RIF list, which

included Mr. Ozinga because he was underutilized. Mr. West testified that as a

mechanical engineer, Mr. Ozinga was an unnecessary luxury for his group, and he was

unable to keep Mr. Ozinga busy, relying on other departments to provide work for him.

In part due to his underutilization, Mr. Ozinga was considered a moderate to low

performer, ranked among the bottom 15% of employees in Mr. West’s department in

performance.

      Mr. West and the other directors under Mr. Sedlacek met with Mr. Sedlacek to

discuss the people selected for the RIF. At that meeting Mr. West argued for the retention

of some of his employees, including Mr. Ozinga. Mr. West succeeded in having one

                                           -7-
employee, Mr. Jantz, 57, retained because there were other functions he could perform,

but Mr. West could not convince the other managers to matriculate Mr. Ozinga into their

departments. The other consulting engineer, five years older than Mr. Ozinga, was not

selected for the RIF.

                                          II. Waiver

       As an initial matter, Plaintiffs contend that Seagate has waived its right to

appellate review by failing to include, among other things, the motion or brief for

judgment as a matter of law, a new trial, or remittitur. “When the record on appeal fails

to include copies of the documents necessary to decide an issue on appeal, the Court of

Appeals is unable to rule on that issue.” United States v. Vasquez, 985 F.2d 491, 494

(10th Cir. 1993). Seagate did include the entire trial transcript, as well as the district

court’s order denying its motion for judgment as a matter of law, or in the alternative, for

a new trial, and for remittitur. Because Seagate’s appeal is based upon challenges to the

evidence and to the sufficiency of the evidence, this is a sufficient record to allow

appellate consideration of the issues raised. See 10th Cir. R. 10.1.1, 10.3. In any event,

Seagate supplemented the record on appeal with the motions and briefs, and we discern

no prejudice to the appellees from this submission.

                             III. Judgment As a Matter of Law

                                              -8-
       Seagate contends that it should have been granted judgment as a matter of law

because Plaintiffs failed to present sufficient evidence to meet their burden of proving

intentional age discrimination. We review the denial of a motion for judgment as a matter

of law de novo. Considine v. Newspaper Agency Corp., 43 F.3d 1349, 1363 (10th Cir.

1994). We construe the evidence and inferences most favorably to the nonmoving party.

Id.

       Seagate concedes that Plaintiffs met their initial burden of proving a prima facie

case under the McDonnell Douglas standard. See McDonnell Douglas Corp. v. Green,

411 U.S. 792, 802 (1973); Ingels v. Thiokol Corp., 42 F.3d 616, 621 (10th Cir. 1994)

(setting out the prima facie elements in the reduction-in-force context). However, the

existence of a prima facie case does not necessarily preclude judgment as a matter of law

against the Plaintiffs. Cf. Ingels, 42 F.3d at 621-23. As we stated in Fallis v. Kerr-

McGee Corp., 944 F.2d 743, 744 (10th Cir. 1991):

       [A]fter a full trial on the merits, the sequential analytical model adopted
       from McDonnell Douglas . . . drops out and we are left with the single
       overarching issue whether plaintiff adduced sufficient evidence to warrant a
       jury’s determination that adverse employment action was taken against him
       on the basis of age.

Seagate has advanced a legitimate, nondiscriminatory reason for its decision to lay off the

Plaintiffs, namely the company-wide reduction-in-force. The fact finder may only infer

discrimination if the Plaintiffs produce evidence that the Defendant’s proffered

explanation is pretextual and unworthy of credence. Ingels, 42 F.3d at 621-22.

                                            -9-
       The Plaintiffs in this case attempted to prove discrimination by attacking the RIF

as pretextual. Plaintiffs do not question the existence of a company-wide RIF, but they

challenge the necessity of the RIF. Plaintiffs presented much evidence tending to show

Seagate’s financial health and profitability, including evidence that Seagate was hiring

shortly before and after the RIF.

       Plaintiffs’ attempt to use Seagate’s pre- and post-RIF hirings as evidence of

pretext ignores the timing of the hirings. The uncontroverted testimony revealed that no

one at Seagate’s Oklahoma City plant learned of the RIF until late June 1991, a few

weeks before it occurred. The fact that Seagate’s managers were hiring before they

learned of the RIF is irrelevant to proving that the RIF was pretextual. Accord Viola v.

Phillips Medical Sys. of North America, 42 F.3d 712, 718 (2d Cir. 1994) (employee’s

first adverse performance review occurred on the eve of a RIF, but this was not evidence

of pretext because the supervisor was unaware of the impending RIF at the time of the

review).

       Plaintiffs’ evidence of Seagate’s post-RIF hirings fails to show pretext because the

people hired were not similarly situated to the Plaintiffs. The evidence reveals that

Seagate did not hire anyone for two months after the RIF, and then after hiring a single

49-year-old for a job dissimilar to the Plaintiffs’, did not hire anyone for another two

months. Seagate did hire several people beginning in mid-November 1991, more than

four months after the RIF, but Plaintiffs’ evidence reveals that the newly hired individuals

                                            - 10 -
were not hired into Plaintiffs’ positions or positions comparable to theirs.2 Most of the

newly hired individuals were hired for the direct labor pool, which was not subject to the

RIF.3 The fact that a company is hiring accounting clerks shortly after reducing its

engineering workforce does not indicate that the engineering RIF is pretextual. Cf. Cone

v. Longmont United Hosp. Ass’n, 14 F.3d 526, 532 (10th Cir. 1994) (“To make a

comparison demonstrating discrimination, the plaintiff must show that the employees

were similarly situated.”).

       Plaintiffs attempted to attack the RIF as pretextual by challenging its necessity. To

that end, Plaintiffs presented much evidence tending to show Seagate’s financial health

and profitability. However, as we have noted before, the wisdom of a RIF is not for a

court or jury to decide. A RIF is a business decision, and “[t]he ADEA is not a vehicle

for reviewing the propriety of business decisions.” Faulkner v. Super Valu Stores, Inc., 3

F.3d 1419, 1426 (10th Cir. 1993).

       Plaintiffs attempt to rely on Denison v. Swaco Geolograph Co., 941 F.2d 1416

(10th Cir. 1991), for the proposition that business judgment may be challenged by

       2
              Mr. Ozinga claims that a mechanical engineer was hired on July 15, 1991, but the
evidence reveals that the person hired was actually a manufacturing advisory engineer, not a
mechanical engineer. There was no evidence that this position was similar to Mr. Ozinga’s or
that Mr. Ozinga was qualified for this position.
       3
                Seagate classified its employees as either “direct labor” or “indirect labor.”
Indirect labor included employees performing concept and design work, such as engineering.
Direct labor included “hands on” type work, such as facilities maintenance. It was undisputed
that only indirect labor employees were at risk during the July 1991 RIF.

                                              - 11 -
financial evidence. In Denison, the company attempted to justify Plaintiff’s termination

based on sales figures indicating that Plaintiff’s division was less profitable than another.

The Plaintiff showed this explanation unworthy of credence with evidence that neither the

Plaintiff nor his replacement was involved in sales, the sales figures were not truly

comparative, the company had strong financial potential, and the company considered the

higher employment cost of older employees in deciding who to retain. The Plaintiff in

Denison presented considerable evidence of pretext other than mere evidence of financial

health. Denison, 941 F.2d at 1421. “‘[T]his court will not second guess business

decisions made by employers, in the absence of some evidence of impermissible

motives.’” Faulkner, 3 F.3d at 1427 (quoting Lucas v. Dover Corp., Norris Div., 857 F.2d

1397, 1403-04 (10th Cir. 1988)). Financial evidence suggesting that a decision, in

hindsight, may not have been prudent is not evidence of improper motive; the ADEA is

not violated by erroneous or even illogical business judgment. Cf. Sanchez v. Phillip

Morris Inc., 992 F.2d 244, 247 (10th Cir. 1993) (Title VII case).

       Plaintiffs also seek to infer pretext from the lack of a formal RIF plan and

instructions. However, it was undisputed that the written RIF criteria were position

elimination, performance, potential, and seniority, in that order. Further, the manner in

which a company chooses to conduct a RIF is within the company’s sound business

discretion, and Plaintiffs have failed to adduce any evidence that the RIF criteria were a

pretext for discriminatory motive. Cf. Ingels, 42 F.3d at 623 (company may alter the rules

                                            - 12 -
it uses for conducting a RIF).

         The Plaintiffs in this case produced statistical evidence purportedly showing a

correlation between age and discharge. While statistical evidence may create an inference

of discrimination, the evidence may be so flawed as to render it insufficient to raise a jury

question. Fallis, 944 F.2d at 746. In this case, Plaintiffs’ statistical evidence is so flawed

because it failed to compare similarly situated individuals. Plaintiffs’ statistics grouped

all employees together regardless of specialty or skill and failed to take into account

nondiscriminatory reasons for the numerical disparities. “‘A plaintiff’s statistical

evidence must focus on eliminating nondiscriminatory explanations for the disparate

treatment by showing disparate treatment between comparable individuals.’” Cone, 14

F.3d at 532 (quoting Fallis, 944 F.2d at 746) (emphasis in original). Statistical evidence

which fails to properly take into account nondiscriminatory explanations does not permit

an inference of pretext. Rea v. Martin Marietta Corp., 29 F.3d 1450, 1456 (10th Cir.

1994).

         Plaintiffs contend that Seagate used subjective criteria in selecting individuals for

the RIF and that the use of subjective criteria creates an inference of discrimination. See

Burrus v. United Telephone Co., 683 F.2d 339, 342 (10th Cir.), cert. denied, 459 U.S.

1071 (1982). Specifically, Plaintiffs take issue with the use of “potential” as a selection

criteria. Plaintiffs argue that “potential” is subjective and that the use of “potential” as a

criteria disparately impacts older employees. We find these contentions unpersuasive.

                                              - 13 -
       First, even if “potential” is somewhat subjective, the use of subjective criteria does

not suffice to prove intentional age discrimination. Pitre v. Western Elec. Co., 843 F.2d

1262, 1272 (10th Cir. 1988). Second, any disparate impact that the use of “potential”

may have is insufficient to state a claim under the ADEA because disparate impact claims

are not cognizable under the ADEA. Ellis v. United Airlines, Inc., 73 F.3d 999, 1007

(10th Cir. 1996).4 The plain language of the ADEA recognizes that disparate impact may

be due to “reasonable factors other than age.” 29 U.S.C. § 623(f)(1); see Ellis, 73 F.3d at

1008. Future job potential is certainly something that a company might legitimately want

to consider in its RIF decision. Indeed, Congress has recognized potential as a legitimate

factor distinct from age; Congress enacted the ADEA to combat “the setting of arbitrary

age limits regardless of potential for job performance.” 29 U.S.C. § 621(a)(2) (emphasis

added). Simply because there may be a correlation between age and potential does not

mean that potential cannot be used as a selection criteria. See Hazen Paper Co. v.

Biggins, 507 U.S. 604, 611-12 (1993).

       Further, in this case, the uncontroverted testimony of the various managers who

chose the Plaintiffs for the RIF shows that the managers looked only to job elimination

and performance, not potential, in selecting the Plaintiffs. All three managers responsible

for the terminations explained in detail why they believed Plaintiffs’ positions were the

       4
                While disparate impact may be evidence of intentional discrimination in certain
cases, Hiatt v. Union Pacific Railroad Co., 65 F.3d 838, 842 n.4 (10th Cir. 1995), Plaintiffs failed
to present evidence that “potential,” as interpreted by Seagate’s managers, was correlated to age.
See Rea, 29 F.3d at 1458.

                                               - 14 -
least important to their departments, and there was no suggestion that “potential” ever

entered into the decision. See Rea, 29 F.3d at 1458.

       Plaintiffs contend that pretext can be inferred from the fact that not every

department was subjected to the RIF. Specifically, Plaintiffs point to eight

“predominantly younger” work groups under Sedlacek which were unaffected by the RIF.

The undisputed testimony reveals that Sedlacek told his five subordinate directors to

make selections from their departments for the RIF and that the individual directors then

made their decisions after assessing the needs of their various groups. The fact that

Sedlacek’s managers choose to leave some work groups intact does not necessarily

indicate pretext. Sedlacek’s managers were asked to make business judgments as to

which employees they could best do without, and the fact that some departments were

unaffected may be a natural consequence of the greater perceived importance of certain

departments. Plaintiffs have not produced any evidence indicating that the unaffected

departments were similarly situated or performed identical functions to the affected

departments, or that the departments were selected because of age. In the absence of any

evidence of an illegal ulterior motive, courts and juries cannot presume to question the

business judgment of company managers. See Faulkner, 3 F.3d at 1426; Sanchez, 992

F.2d at 247.

       Plaintiffs claim that they were better qualified than other younger retained

employees, allowing an inference of pretext. However, both Mr. Ozinga and Mr.

                                            - 15 -
Woosley were selected for the RIF solely on the basis of position elimination, making

their qualifications irrelevant. Mr. Woosley disputes the fact that his position was

eliminated because his photo lab responsibilities were still performed after his layoff.

However, the test for position elimination is not whether the responsibilities were still

performed, but rather whether the responsibilities still constituted a single, distinct

position. Mr. Woosley’s former responsibilities were divided up and absorbed by a four-

person rotation of existing employees, and no new person took over his former

responsibilities.

       Mr. Furr was selected on the basis of position elimination and performance,

making his qualifications relevant only in relation to other employees performing the

same functions. Mr. Furr’s manager, Mr. Becker, compared Mr. Furr to the other

employee in the department performing the same duties and determined that the other

employee was a superior performer. It is the manager’s perception of the employee’s

performance that is relevant, not plaintiff’s subjective evaluation of his own relative

performance. Branson v. Price River Coal Co., 853 F.2d 768, 772 (10th Cir. 1988).

       Plaintiffs rely heavily on Seagate’s 1992 salary forecasts, arguing that the forecasts

were based on the same criteria used in the RIF and thus the employees at the bottom of

the forecast should have been laid off first. However, as the Plaintiffs’ own witness

conceded, the salary forecasts fail to take into account the possibility of position

elimination. Further, Plaintiffs attempt to rely on salary forecasts which combine persons

                                             - 16 -
of various occupations from different departments, ignoring the uncontroverted testimony

that managers were only allowed to select individuals from within their own departments.

Plaintiffs presented no evidence that they were similarly situated to the other employees

on the forecasts. The undisputed fact that each manager could only select from

individuals in his own department negates the value of an interdepartmental ranking in

showing pretext. Considering only the individuals in each manager’s individual

department, each plaintiff was ranked the lowest of those similarly situated to him.

       Finally, as circumstantial evidence of pretext, Plaintiffs claim that Sedlacek, West,

and Diffin all ranked their subordinate managers in order of age. While older managers

were ranked lower on a whole by these three managers, the uncontroverted testimony was

that age was not a factor in the rankings nor were ages included on the rankings.

Plaintiffs have produced absolutely no evidence that age was a factor in these rankings,

and Plaintiffs each concede that they did not believe their managers would intentionally

discriminate on the basis of age. A statistical coincidence does not rise to the level of

pretext.

       After a careful review of the record in this case, we have determined that even in

the light most favorable to the them, Plaintiffs have failed to produce evidence sufficient

to demonstrate pretext and to carry their burden of proving intentional age discrimination.

Accordingly, we hold that the district court erred in denying Seagate’s motion for

judgment as a matter of law. Because we find that judgment as a matter of law should be

                                            - 17 -
granted in favor of the Defendant, we need not reach the other issues raised in this appeal.

       REVERSED and REMANDED for entry of judgment in accordance with this

opinion.

                                           - 18 -