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Marzano v. Computer Science Corp. Inc.

July 31, 1996

CATHERINE A. MARZANO,

APPELLANT

v.

COMPUTER SCIENCE CORP. INC.; CSC PARTNERS INC.



On Appeal from the United States District Court For the District of New Jersey

(D.C. Civil No. 94-3102) Argued May 23, 1996

Before: SLOVITER, Chief Judge, SAROKIN and OAKES, Circuit Judges *fn*

SAROKIN, Circuit Judge

(Opinion filed July 31, 1996)

OPINION OF THE COURT

We are asked to consider once again the proper allocation of burdens in cases involving allegations of discriminatory employment actions. Cases of this nature inevitably raise thorny issues because they typically require the plaintiff to establish proof of the employer's intent not through direct evidence, which is rarely available, but through complex inferential schemes.

The issue in the specific matter before us concerns the elements of a prima facie case under the familiar McDonnell Douglas scheme in a case in which the plaintiff-employee was terminated, allegedly as the result of a reduction in the employer's workforce. The case raises as well issues involving the scope of the exceptions to the New Jersey Family & Medical Leave Act, the enforceability of communications by an employer as an implied contract, and the extent of liability of a parent corporation for its subsidiary's employment decisions.

I. Facts and procedural posture

Even by the standards of the acrimonious world of litigation, there is little in this case about which the parties agree. They agree that appellant, Catherine Marzano, was hired by one of the appellees, Computer Science Corp., in September 1990; that she went on maternity leave in July 1993; that she gave birth to her son the next month; and that she was laid off on October 5, 1993. Beyond this bare-bones chronology, however, much is in dispute: who Ms. Marzano's employer was at any one time; how well that employer, whoever it was, was doing financially, and how we should determine this; what Ms. Marzano's job entailed; what the jobs of people hired after she was laid off entailed, and what qualifications were required to perform those respective jobs; why she was laid off; and who needs to establish the reason and what is necessary to do so.

Of one thing we are certain: on September 5, 1990, Ms. Marzano was hired by Computer Science Corporation ("CSC") as a "junior technical recruiter." *fn1 Her contract indicates that she was hired as an at-will employee. She was assigned to work in a division of CSC named CSD in Piscataway, New Jersey.

At some later point, CSD was merged with CSC Partners, a wholly owned subsidiary of CSC. It is not entirely clear when the merger occurred. Defendants state that CSD and CSC Partners were "functionally merged" in April 1991, Appellees' Brief at 4; see App. at DAS 74; DAS 178-79, and that after the merger, all CSD employees became employees of CSC Partners.

According to testimony by officials of CSC Partners, at the time of the merger Partners was comprised of twelve separate business units. Defendants describe a business unit as "a revenue generation and profit and loss center for delivering consulting systems, integration and development work to its client base." App. at DAS 138. Most of the units are organized around a region. App. at DAS 183. There are, for instance, Chicago, Minneapolis, and NY Metro units. One unit, however, was allegedly "devoted exclusively to servicing AT&T on a national basis." Appellees' Brief at 5; see App. at DAS 184-85. That unit was known as the AT&T National Business Unit.

According to Ms. Marzano's affidavit, the merger had little effect on her day-to-day worklife, to the point where she states that she "continued to consider herself a CSC employee." Appellant's Brief at 5. More significantly, she allegedly continued to collect paychecks from CSC for some time after the merger allegedly occurred. App. at A225.

Ms. Marzano's performance seems to have been satisfactory or better throughout her tenure at CSC and CSC Partners. After seven months of employment, she received a twenty-percent salary increase and a "good" performance review by her supervisor, App. at A227, and she received other positive feedback from the company. See, e.g., App. at A252.

In June 1991, Ms. Marzano was assigned to a new position. She contends that she was promoted to account executive for the Sales Division, App. at A227. Defendants, on the other hand, state that "her duties were modified to an administrative support role for the Bell Labs account" following a reduction of personnel at CSC Partners. App. at DA3. In any case, Ms. Marzano states that she received a "very good" evaluation at the end of that year. App. at A228.

In April 1992, she became marketing administrator for the AT&T National Account; she received a ten-percent salary increase and an "above-average" rating in her evaluation at the end of that year. App. at A228, A231.

Mr. Marzi stated in a deposition that he was hired as business unit manager of the AT&T Unit in September 1992. App. at DAS 134. After reviewing the Unit's marketing plan and finding it ineffective, he discontinued it and reassigned the marketing personnel. App. at DAS 142-47. As a result of the changes, Ms. Marzano's duties were allegedly reassigned to provide administrative support to Mr. Marzi. App. at DAS 147-49.

In January 1993, Ms. Marzano informed Mr. Marzi that she would be going on maternity leave in July. According to her affidavit, shortly before going on leave Mr. Marzi told her that she would receive additional responsibilities when she returned, and gave no indication that her position might be in jeopardy. App. at A231. She further asserts that when she left on maternity leave, she had a conversation with Mr. Marzi in which he spoke to her "as if [she] wasn't coming back." App. at A232. Ms. Marzano allegedly reassured Mr. Marzi that she intended to return immediately after maternity leave. Id.

According to Mr. Marzi's deposition, the AT&T Unit started experiencing "significant losses" beginning in the spring of 1993 as a result of AT&T's own financial difficulties, which led the telephone company to curtail its spending on consulting work. App. at DAS 136-37. As a result, the AT&T Unit allegedly started considering the need for staff reductions. According to Defendants, Ms. Marzano's position was particularly vulnerable because her salary was "non-billable" and non-revenue-generating, and her position "non-essential." Appellees' Brief at 9. Defendants allege that Mr. Marzi initially tried to "identify a more essential role for plaintiff following her leave," id., but after financial conditions worsened, decided to eliminate her position altogether along with nine others out of some fifty positions in the AT&T Unit in New Jersey. Id. at 10. (According to Defendants, the AT&T Unit was eventually merged into the NY Metro Business Unit in March 1994. App. at DAS 139.)

In any case, Ms. Marzano went on maternity leave on July 27, 1993 and gave birth to her son on August 14, 1993. App. at A232. Mr. Marzi allegedly called her a few weeks later to tell her that her position was being "eliminated" and that she was fired. Id. On October 5, 1993, CSC Partners sent Ms. Marzano a letter of termination confirming the bad news and attributing the decision to a reduction in force in the AT&T Business Unit caused by financial difficulties. App. at DA47. Ms. Marzano asserts in her affidavit that she went to speak with Mr. Marzi shortly after her termination, and that he told her "how his wife had collected unemployment so [that] she could stay home with their kids and how [Ms. Marzano] might be 'better off' if [she] could stay home with [her] son and collect unemployment." App. at 233.

On November 1, 1993, Mr. Marzi circulated a memorandum to the "AT&T National Business Unit" and the "NY Metro Business Unit" announcing the consolidation of certain "services and functions" of the two units, and advertising three positions: administrative manager and marketing manager, both to be filled immediately, and "general consulting practice manager" for NY Metro. Ms. Marzano was, according to her affidavit, never advised of or considered for these positions. App. at A234-35. Barbara Zelasko, a person from outside CSC and CSC Partners, was hired as marketing manager in March 1994.

Ms. Marzano asserts in her affidavit that pregnancy was referred to as the "kiss of death" at CSC because numerous female employees (at least seven, she states) had been terminated after taking maternity leave. App. at A236.

Ms. Marzano instituted the instant action in response to her termination on May 18, 1994 by filing suit in the Superior Court of New Jersey against Computer Science Corporation and CSC Partners, Inc. ("Defendants"). In her complaint, Ms. Marzano alleged unlawful discrimination by Defendants on the basis of her pregnancy in violation of the New Jersey Law Against Discrimination, N.J.S.A. Section(s) 10:5-12(a); unlawful interference with her rights under the New Jersey Family Leave Act, N.J.S.A. Section(s) 34:11B-9; and breach of an implied-in-fact employment contract based on Defendants' written policy. The case was removed to the United States District Court for the District of New Jersey based on diversity of citizenship, 28 U.S.C. Section(s) 1332.

Defendants responded to Ms. Marzano's complaint with a motion for summary judgment on all counts, pursuant to Fed. R. Civ. P. 56(c). The district court granted the motion on August 17, 1995, bringing the proceedings before that court to an end.

Ms. Marzano filed the instant appeal on August 28, 1995.

II. Jurisdiction

This is a civil action between the citizens of different states, and the matter in controversy exceeds the sum of $50,000. Therefore, the district court had original jurisdiction pursuant to 28 U.S.C. 1332(a)(1).

The district court issued an order granting Defendants' motion for summary judgment on August 17, 1995. We have jurisdiction over an appeal from this final order pursuant to 28 U.S.C. Section(s) 1291.

III. Standard of review

We exercise plenary review over a grant of summary judgment by the district court, Armbruster v. Unisys Corp., 32 F.3d 768, 777 (3d Cir. 1994), and apply the same test that the district court should have applied. Id.

Summary judgment should be granted if "there is no genuine issue as to any material fact" and "the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c); see also Armbruster, 32 F.3d at 777. In making its determination, the court should view the facts in the light most favorable to the nonmoving party and draw all inferences in that party's favor. Armbruster, 32 F.3d at 777.

In an employment discrimination case, the burden of persuasion on summary judgment remains unalterably with [the employer] as movant. The employer must persuade the court that even if all of the inferences which could reasonably be drawn from the evidentiary materials of record were viewed in the light most favorable to [the plaintiff], no reasonable jury could find in [the plaintiff's] favor. Sorba v. Pennsylvania Drilling Co., Inc., 821 F.2d 200, 201-02 (3d Cir. 1987), cert. denied, 484 U.S. 1019 (1988).

IV. The employment discrimination claim

Ms. Marzano first claims that by terminating her employment, the defendants unlawfully discriminated against her on the basis of her pregnancy, in violation of the New Jersey Law Against Discrimination, N.J.S.A. Section(s) 10:5-12(a).

The district court analyzed Ms. Marzano's allegation as a claim of discrimination in a force-reduction setting. District Opinion, typescript at 4 (citing Massarsky v. General Motors Corp., 706 F.2d 111, 118 (3d Cir.), cert. denied, 464 U.S. 937 (1983)). We have held that in order to establish a prima facie case of this sort, "the plaintiff must show he was in the protected class, he was qualified, he was laid off and other unprotected workers were retained." Armbruster v. Unisys Corp., 32 F.3d 768, 777 (3d Cir. 1994). The district court, by its own admission, rejected the "literal language of the retention requirement," District Opinion at 5, and held instead that

to establish a prima facie case in the context of a work-force reduction, a plaintiff must do more than merely show that unprotected employees were retained in their positions; the plaintiff must produce some additional evidence that he was singled out for discharge because of his protected status. Id. at 5-6.

Based upon this novel standard, the district court found that "plaintiff has merely asserted that while she was terminated, other employees were retained," id. at 6, and that she had "failed to adduce any evidence of a nexus between her pregnancy and her discharge" and "to demonstrate that other, non-pregnant workers were treated more favorably." Id. As a result, the court concluded that Ms. Marzano had failed to establish a prima facie case of discrimination, and that the defendants were entitled to summary judgment on this claim. Id.

Ms. Marzano challenges the district court's conclusion on a number of grounds. She argues, first of all, that no workforce reduction occurred, that accordingly the district court applied the wrong legal standard to her claim, and that under the proper legal standard she has established a prima facie case of discrimination. Appellant's Brief at 27. Second, Ms. Marzano argues that even if a workforce reduction did occur, the court did not apply the correct standard, id. at 30-34, and that, under the correct standard, Ms. Marzano has easily made a prima facie case of discrimination. Id. at 29. Third, Ms. Marzano argues that even if the court did apply the right test, she did produce "additional evidence" of the defendants' discriminatory intent sufficient to meet her prima facie burden. Finally, Ms. Marzano argues that she has produced sufficient evidence to allow a jury to conclude that any reason proffered by the defendants for her layoff is pretextual. Id. at 38.

A. The McDonnell Douglas burden-shifting scheme

The Supreme Court of New Jersey has adopted the methodology governing federal employment discrimination law for state claims of a similar nature. See Clowes v. Terminix International, Inc., 538 A.2d 794, 805 (N.J. 1988); ...


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