Supervisor Mistakes Pave the Way for $3.7 Million Verdict

by John S. Gannon

Caution: The following post may keep HR professionals awake at night. Reader discretion is advised.

The story (or better put, nightmare) begins with James Castelluccio, a former Vice President with IBM. Castelluccio spent his entire professional career—40 years­—working for IBM. He started with the company at the age of 21 and worked there through his termination at 61.

In 2007, Castelluccio’s direct supervisor was replaced. His new supervisor kicked off their first meeting together by asking about his age. She followed that up by suggesting he was “old enough to bridge to retirement.” You probably see where this is going.

Castelluccio was demoted a few months later and replaced by someone 10 years younger. Business was taken away from Castelluccio as a result of the demotion. He approached his new supervisor and asked about the lack of meaningful work. She told Castelluccio that she would try to find some business for him, but if none was found he should consider retiring. Castelluccio made it clear he did not plan on retiring. A few months later he was given an ultimatum: find a new position with IBM or face termination. The basis? A history of unacceptable performance. Mind you, in 2006, the year before his new supervisor entered the picture, he was given a performance review rating of “solid contributor.” After giving the ultimatum, the supervisor again mentioned that Castelluccio would be eligible to retire on his termination date.

Castelluccio was terminated in June 2008. He rejected a severance proposal and opted to sue. Castelluccio brought a lawsuit in Connecticut federal court alleging age discrimination in violation of the Age Discrimination in Employment Act (ADEA), and the case went all the way to trial. The jury agreed that Castelluccio’s termination was motivated by age bias and awarded him $999,900 in lost wages and $500,000 in emotional distress damages. Because the jury believed that IBM’s violation of the ADEA was “willful,” Castelluccio’s $999,990 lost wages award was doubled. In addition, the court awarded Castelluccio $1.2 million in attorneys’ fees and costs, which are typically available to plaintiffs when they are successful in employment discrimination claims.

For now, the 3.7 million dollar question remains: what could the employer have done better? Clearly, the supervisor’s ill-advised comments sunk the ship, but was there anything IBM could have done to avoid the monstrous verdict? The employer did offer Castelluccio a severance package, presumably with an ADEA claim release, which he rejected. Perhaps the employer cut off severance negotiations too soon. The fact that the case made it to a jury also appears to have hurt IBM. The case involved mega-giant IBM firing an employee with 40 years of service, which no doubt played into juror’s sympathies.

Employers wishing to avoid the risk of a runaway jury verdict may want to consider requiring employees to sign arbitration agreements at the outset of or during their employment. Arbitration agreements require most employment-related disputes to be brought before an arbitrator, rather than in court before a judge and jury.

Skoler Abbott will be hosting a breakfast briefing this fall where attorneys will discuss the pros and cons of using arbitration agreements in the employment context. Of course, if you would like to discuss the use of arbitration agreements before the briefing, feel free to contact any of the attorneys at Skoler Abbott.