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Healy v. New York Life Insurance Co.

argued: January 11, 1988.

WILLIAM JOSEPH HEALY, JR., APPELLANT
v.
NEW YORK LIFE INSURANCE COMPANY, APPELLEE



On Appeal from the United States District Court for the District of New Jersey, D.C. Civil No. 86-4141.

Higginbotham, Becker, Circuit Judges and Shapiro, District Judge*fn*

Author: Becker

Opinion OF THE COURT

BECKER, Circuit Judge.

This is an appeal from a grant of summary judgment for the employer in an action brought under the Age Discrimination in Employment Act, 29 U.S.C. §§ 621-634 (1982). The case was brought by William Healy, a former Vice President of New York Life Insurance Company ("the Company"), following his discharge as part of a company-wide reduction in force ("RIF"), which consolidated high-level management positions in response to competitive pressures. It is clear from the record that Healy established a prima facie case. It is also clear that the Company articulated legitimate business reasons for assigning Healy's duties to a somewhat younger man who, the company claims, had demonstrated greater ability than Healy to assume high level managerial responsibility.

The difficult issue in the case is whether Healy demonstrated that a genuine issue of material fact existed concerning the Company's asserted non-discriminatory reasons for Healy's discharge. More specifically, we must determine whether the district court correctly decided that the legitimate business reasons articulated by the Company did not serve as a pretext to mask age discrimination. Our review is plenary. The question is a close one. However, we conclude that Healy did not meet his evidentiary burden of demonstrating a genuine issue of material fact as to pretext. We therefore will affirm the district court's grant of summary judgment in favor of the Company.

I.

Healy was fifty-six years old when the Company discharged him after twenty-five years of service. His tenure with the Company began in 1963 when he was hired as an agent. Healy was promoted several times, eventually becoming a Vice President of the Company's Marketing Department in 1979, responsible, inter alia, for the Company's internal communications. Because his performance with the Company after 1979 forms the factual matrix for the summary judgment ruling, we recite in some detail the relevant facts of record, developed through depositions, affidavits, and company documents (particularly performance evaluations).

At the time of Healy's 1979 promotion, the Marketing Department was composed of two divisions, agent training and management training. The agent training division taught agents to sell the Company's insurance and financial products. To be successful, sales agents had to learn consumer psychology and technical matters such as the tax advantages of various products. Managers recruited and motivated the agents. The training of managers focused on personnel development, planning and organizing skills, managing expenses and achieving profitability, and the recruiting of new agents.

Prior to the reduction in force, several management levels supervised agent and management training. These levels included Assistants and Associates who reported to Managers, Managers who reported to Assistant Vice Presidents, and Assistant Vice Presidents who reported to the Vice President in charge of the division. During Healy's tenure as Management Vice President in charge of the Management Training division, another Vice-President, Ed Hesse, was responsible for agent training. Marketing Vice President Walter Ubl supervised both positions, and he, in turn, reported directly to the head of the Marketing Department, Senior Vice President Jerald Hinrichs.

This rough organizational scheme demonstrates that the Vice Presidents for both the agent and management training jobs were high-level executive positions possessing substantial management authority. Successful performance in these jobs required a resourceful executive willing to take initiative and to assume responsibility. At the time of his discharge, Healy managed a budget of close to $2,000,000 and directly supervised three Assistant Vice Presidents who were responsible for other Managers and Associates.

During the years immediately following his 1979 promotion, Healy received generally favorable evaluations. However, these evaluations also evidenced deficiencies in high-level executive performance. In a November, 1983, evaluation, Healy's immediate supervisor, Vice President Walter Ubl, reported that Healy "is a very experienced and valuable employee. . . . His extensive background with the company has enabled him to apply creative approaches to new challenges." App. at 50. But this same evaluation also noted that Healy became "so involved in [one] program that other ongoing programs cause him concern." App. at 50. Nevertheless, Healy received the highest rating possible in this 1983 evaluation and subsequently was promoted to Marketing Vice President in charge of management training in June, 1984.

Although Healy earned favorable reviews in this new position, his evaluations revealed significant shortcomings. In a March, 1985, review, Healy's immediate superior (who is no longer with the Company) wrote that Healy "demonstrates significant people and team-building skills. He takes direction and guidance easily and quickly. . . . He utilizes good judgment in addressing his responsibilities." App. at 65. But like the earlier evaluation, the reviewer echoed the concern that Healy "must delegate more of the work-load and spend more time in staff development." App. at 65.

In August, 1985, Healy was assigned responsibility for preparing the Management by Objectives ("MBO") report for the entire Marketing Department. MBO is a management theory which posits that managers will be more effective if they can analyze what they must accomplish and develop measurable standards to determine if the desired objectives have been obtained in key result areas. The MBO was outside Healy's normal manager training duties and required him to focus on the work performed by the Marketing Department as a whole.

Since the MBO project implicated the interests of the entire Marketing Department, Healy worked closely with his superiors, Hinrichs and Ubl. The affidavits of both Hinrichs and Ubl represent that Healy's coordination of the MBO program was unsatisfactory, and that his performance lacked creativity and initiative. According to the affiants, rather than exercising the insight and innovation that the project required, Healy merely collated and collected information from others. Hinrichs and Ubl state that Healy's poor performance created delays and resulted in additional work for both of them.

Reacting to this criticism, Healy testified that he thought that his function in the MBO project was to incorporate the same measurements that had been used previously, assemble the raw data, and pass the information on to his superiors rather than analyze the results himself. Healy further claimed that the MBO report was not assigned exclusively to him, that he never was informed that his performance was unsatisfactory, and that, in any case, he spent less than 10 percent of his time preparing the report.

Four months later, in December of 1985, the Company decided to reduce the total salary expenses of management personnel by 20 percent to remain competitive in an increasingly demanding business environment. As a result, the Company offered employees who were 55 years or older attractive early retirement packages. Departments that had not reduced managerial staff by 20 percent faced involuntary terminations. The Marketing Department was unable to reduce its total salaries by the requisite 20 percent, despite the early retirement of Ed Hesse, the Vice President in charge of agent training.

On February 25, 1986, Hinrichs informed Healy that he was being discharged. The Company also discharged seven other members of the Marketing Department at the same time. Hinrichs represented that Healy was discharged because he

could neither effectively supervise a combined [manager and agent] training division nor effectively handle the substantial increase in responsibility that would have been required had he been retained. I found that the plaintiff, rather than taking it upon himself to broaden his responsibilities, would instead try to narrow the scope of his functions. He appeared reluctant to assume expanded responsibilities and encountered problems when faced with coordinating a substantial number of on-going programs. Moreover, he was not good at identifying important future problems or objectives and deciding how to meet them. He also tended to focus only on his own area of responsibility.

App. at 141-42. Hinrichs further states that his decision also reflected Healy's inadequate performance on the MBO program.

Following Healy's discharge and the voluntary retirement of the Vice President for agent training, Hinrichs initially decided to reallocate the responsibilities of these two positions among the Assistant Vice Presidents. He decided to leave the Vice President positions vacant and to determine later whether to create a consolidated position, combining the functions of both jobs. Most of Healy's responsibilities were assumed by Paul Russell, age 47, with the exception of the MBO program, which was assigned to another Vice President, Richard Carter, age 55. At the time of Healy's discharge, Russell had been with the company 22 years, most recently serving as one of Healy's three Assistant Vice Presidents.

Hinrichs and Ubl both testified that Russell's performance during the period following Healy's departure was superior to Healy's prior performance. As a result, in July, 1986, Hinrichs reorganized the Marketing Department, combining the responsibilities of the Vice Presidents in charge of agent training and management training into one position under Russell's direction. This combined position involved more responsibility than the job from which Healy had been discharged and required someone with a broad perspective on the operations of the Marketing Department, willing to assume responsibility for both agent and management training in the post-RIF business environment. Indeed, Russell was ultimately responsible for a budget of 4.7 million dollars -- over twice as much as Healy's at the time of his discharge. In justifying this promotion, Ubl contends that Russell

was an excellent manager with the capability of assuming greatly expanded responsibilities. Mr. Russell had conceived, designed and executed numerous valuable programs and initiatives and was the type of manager who would enlarge his job to ensure that it was done as effectively as possible, and was well able to handle the additional responsibility.

App. at 167.

On July 9, 1986, Healy filed an age discrimination charge with the Equal Employment Opportunity Commission. On August 4, 1986, the Company completed Healy's final evaluation. This evaluation reemphasized Healy's limitations in assuming responsibility outside the formal boundaries of his job description. The evaluation rated him a 3 on a scale of 1 to 5 (1 is the highest), as opposed to the 1 Healy had earned in his 1983 review and the 2 he had received in 1985. Although the evaluation mentioned Healy's broad experience and his communication skills, it also found that Healy "too zealously guards his 'turf' to the extent subordinates feel little opportunity to expand areas of responsibility." App. at 82. Furthermore, the review stated that Healy lacked an "acquisitive view of what needs to be done as part of his job." The report noted that Healy "needs to delegate more -- take a bigger view of his job. Must be more future oriented -- focuses on the here and now." App. at 82.

On October 21, 1986, Healy brought suit in the district court for the District of New Jersey, alleging that his discharge violated the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. §§ 621-634 (1982). Healy's complaint sought damages for lost income and benefits, reinstatement and restoration of benefits, liquidated damages, costs, attorneys' fees. Upon the completion of discovery, the Company moved for summary judgment on the ground that Healy had failed to raise a genuine issue of material fact supporting his contention that his termination resulted from age discrimination.

In its summary judgment papers, the Company proffered statistical evidence to support its position that it did not use the RIF as a vehicle for age discrimination. The evidence showed that the Company-wide percentage of employees over the age of forty remained essentially the same as a result of the RIF. Similar results occurred in the Marketing Department. Of the thirty-four Marketing Department employees who were fifty years or older at the time of the RIF, Healy was the only one fired. The statistics are set forth in more detail, infra typescript at 22-23. The data did not, however, include the employees who elected early retirement.

Analyzing the record in response to the Company's motion for summary judgment, the district court first found that "[t]he Company has presented substantial evidence to support its claim Healy was not discharged because of his age." App. at 195. The court identified legitimate business reasons supporting the Company's decision, including a company-wide RIF which increased the percentage of employees in the protected age group, specific shortcomings in Healy's performance, and the Company's judgment that another executive (Russell) "was more highly qualified to handle the post-reduction consolidated responsibilities." Id. at 196. The court then concluded that Healy had "submitted no specific facts either to affirmatively support the allegations contained in his complaint or to rebut or undermine the evidence presented by the Company." Id. at 198. It therefore granted the motion for summary judgment. This appeal followed.

II.

A.

The requisites for proof of age discrimination and the standards governing the grant of summary judgment in ADEA cases have been explained in numerous opinions. See Chipollini v. Spencer Gifts Inc., 814 F.2d 893 (3d Cir.) (in banc), cert. dismissed, 108 S. Ct. 26 (1987); Sorba v. Pennsylvania Drilling Co., 821 F.2d 200 (3d Cir. 1987), cert. denied, 484 U.S. 1019, 108 S. Ct. 730, 98 L. Ed. 2d 679 (1988); see also Texas Department of Community Affairs v. Burdine, 450 U.S. 248, 252-57, 67 L. Ed. 2d 207, 101 S. Ct. 1089 (1981) (analogous standard for gender discrimination). We need not restate those standards here, though we shall, of course, apply them in our discussion. Before analyzing the facts of record in light of these standards, we make two preliminary comments.

First, Healy sought to satisfy his required burden of proof of intentional discrimination by the use of indirect rather than direct evidence, as the law permits. Second, we are satisfied that Healy established a prima facie case, since he showed that: (1) at age fifty-six he was a member of a protected class; (2) he was qualified for the position from which he was discharged; (3) he was discharged despite his qualifications; and (4) the position was filled by a person sufficiently younger to permit an inference of age discrimination.*fn1

Given the facts set forth above about the demands of high-level management positions and the deficiencies in Healy's performance, the Company proffered a legitimate business reason for discharging Healy. We turn therefore to an analysis: (1) of the Company's legitimate business reasons for the discharge; and (2) of Healy's claim of pretext with a view to determining whether Healy has raised a genuine issue of material fact. To facilitate this analysis, we review the evidence in four separate sections. First, we look at Healy's qualifications as represented by his evaluations and by his performance on the MBO. Next, we turn to Russell's performance. Then we examine the statistical evidence presented by the Company. Finally, in terms of the legal standard, we examine the record to see if Healy has presented specific evidence that " could support an inference that the employer did not act for non-discriminatory reasons." Chipollini, 814 F.2d at 900 (emphasis in original).

We note preliminarily that each ADEA case must be judged on its own facts. The legitimacy of the employer's proffered business justification will be affected both by the duties and responsibilities of the employee's position and the nature of the justification. Concomitantly, the significance of variations among an individual's personnel evaluations may well depend upon the nature of the employee's responsibilities; a more exacting standard of performance may have to be applied to positions of greater responsibility.

B.

Both Ubl and Hinrichs submitted affidavits identifying specific weaknesses in Healy's performance. These affidavits stated that Healy did not delegate enough, that his focus was too narrow, and that he did not readily assume new responsibilities outside the formal boundaries of his job description. As Ubl states in his affidavit:

I found that the plaintiff lacked an acquisitive view of his job, and rather than taking it upon himself to broaden his responsibilities, would instead try to narrow the scope of his functions. I found that the plaintiff was reluctant to assume expanded responsibilities, and that he encountered problems when faced with coordinating a substantial number of ongoing programs. Plaintiff tended to focus only on his own area of responsibility, and even in that role, he had substantial difficulty in effectively delegating work to lower-level employees. Instead, he would become enmeshed in details himself, whole losing sight of the broader picture. In addition, the plaintiff was not good at identifying important future problems or objectives or deciding how to meet them. . . . I determined that he did not possess the management abilities that would render him capable of adequately handling the substantial increase in responsibilities that would be required following the reduction or of effectively managing a combined . . . division.

App. at 165-67; see also Hinrichs Affidavits, supra typescript at 7. These allegations also were supported by Healy's performance reviews in 1983 and 1985 and by his post-termination evaluation. See supra typescript at 2-5. Nevertheless, Healy makes three arguments that these identified weaknesses were pretextual.

First, Healy argues that the same evaluations cited by the Company as evidence of his unwillingness to take the initiative also contain portions that showed that he assumed new responsibilities. However, this fact does not refute the Company's legitimate business reasons for his discharge, even when read in the light most favorable to Healy. These 1983 and 1985 evaluations referred to jobs that demanded less responsibility and initiative than the consolidated position eventually filled by Russell. Good (or even excellent) performance in a lower level position does not necessarily imply success in a more competitive environment. Furthermore, although often complimentary, the reviews did note that Healy had problems delegating authority and managing multiple projects -- factors clearly relevant to the demanding managerial job that Russell eventually filled.

Second, Healy points out that the Company promoted him immediately following the very 1983 evaluation which it uses to demonstrate his shortcomings as a manager. However, a promotion from a lower level job, despite identified weaknesses, does not suggest that the weaknesses do not exist or that they would not be important in evaluating performance in a more demanding job.

Finally, Healy notes that his 1986 post-termination evaluation is dated August 4, three weeks after he filed a charge of age discrimination with the EEOC. We recognize that in Gunby v. Pennsylvania Electric Company, 840 F.2d 1108 (3d Cir. 1988), petition for cert. filed, 56 U.S.L.W. 3834 (U.S. May 25, 1988), this court found that a highly unfavorable performance evaluation prepared after an employee expressed his view that he might have been passed over for a promotion because of race discrimination provided evidence of pretext. In the case sub judice, however, Healy's post-termination evaluation was not substantially different from his previous ones. Although Healy descended one notch in the numerical ratings, the 1986 evaluation cited performance problems that had been apparent in previous reviews. Healy submitted no evidence indicating that ...


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