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Beckman v. KGP Telecommunications, Inc.

United States District Court, D. Minnesota
Mar 16, 2004
Civ. No. 02-1261 (JNE/JGL) (D. Minn. Mar. 16, 2004)

Opinion

Civ. No. 02-1261 (JNE/JGL)

March 16, 2004

James H. Raster, Esq. and Jennifer A. Kitchak, Esq., Nichols Kaster Anderson, P.L.L.P., appeared for Plaintiff John R. Beckman

John J. McDonald, Jr., Esq., Meagher Geer, P.L.L.P., appeared for Defendant KGP Telecommunications, Inc.


ORDER


This is an age discrimination case brought by John Beckman against his former employer, KGP Telecommunications, Inc. (KGP), under the Age Discrimination in Employment Act (ADEA), 29 U.S.C. § 621-634 (2000), and the Minnesota Human Rights Act (MHRA), Minn. Stat. § 363A.02 (Supp. 2003). The case is before the Court on KGP's motion for summary judgment. For the reasons set forth below, the Court grants the motion.

The MHRA was renumbered in 2003, after Beckman filed suit under Minn. Stat. § 363.01, subd. 1(2) (2000).

I. BACKGROUND

KGP is a Minnesota-based distributor of telecommunications products. Kathy Putrah is the owner of KGP. Several members of the Putrah family are involved with the business, including her husband, Dale, Sr., and her sons, Trevor and Tim. Trevor and Tim are the KGP executives who made the decisions at issue here. In 1997, KGP interviewed and hired Beckman, who was then 54 years old. At first, Beckman worked as an outside sales account representative in the Plymouth, Minnesota, office with three other inside sales representatives. The four employees pooled and split the commissions that they earned. Later, as new offices opened, sales representatives stopped pooling commissions; instead, KGP assigned individual sales representatives to accounts from which the representatives earned commissions.

During 1997 and 1998, KGP's business grew. In July 1999, Beckman became a national sales manager for one of KGP's divisions. As a result, KGP assigned specific account representatives to the accounts Beckman had previously serviced. In his new position, Beckman received a raise, but he no longer collected commissions. Beckman did well in this position, and in May 2001, he received another raise.

Also in May 2001, KGP hired John Grubb as a director of business development. Grubb, who was also in his 50s, had worked in the telecommunications industry since 1978, and he had a degree in business management. Later in 2001, KGP's business began to suffer. KGP laid off employees, closed offices, and implemented other cost-cutting measures. In August 2001, KGP decided to consolidate two positions-Beckman's national sales manager position and Grubb's director of business development position-and create a new position-director of sales and business development. KGP placed Grubb in the newly created position.

KGP informed Beckman of its decision to consolidate his position and place Grubb in the new position. KGP asked Beckman if he wanted to return to working as an outside sales account representative. KGP and Beckman negotiated a salary, which was over $35,000 less than Beckman was making as a national sales manager. Beckman accepted the job, and Grubb became Beckman's supervisor. Because the commission pooling system was no longer in place, KGP assigned Beckman designated accounts from two other employees who had been laid-off. In August or September 2001, Beckman met with Grubb. During the meeting, Beckman asserts that Grubb called him "old man" and indicated that Beckman would be terminated unless Grubb gave Beckman more accounts to service. Beckman contends that he never received the accounts he was promised. Later, Beckman asserts that he received a call from Dale Putrah, Sr., who stated, "[h]ey old man, you didn't go and slit your wrists or anything, have you?" Both Grubb and Putrah deny making the statements.

In November 2001, KGP gave Grubb a raise. On December 3, it implemented a second round of layoffs. On December 14, KGP restructured its divisions in an effort to save money. In the process, account representatives were assigned to specific geographic regions. During this time, KGP considered terminating Beckman but instead decided to ask him to accept a salary reduction of approximately $25,000. KGP did not ask any other employees to accept a salary reduction. With the reduction, Beckman's salary was in line with the base salary of KGP account representatives. KGP also asked if Beckman wanted to be assigned to the Midwest geographic region. Beckman agreed but asked to be supported by Tom Moser, an account representative that Beckman respected, instead of an account representative suggested by KGP. He also asked that he and Moser pool their commissions. Beckman's requests were granted. Beckman shared all of his accounts with Moser, while Moser continued to service his own accounts as well as those he shared with Beckman. At some point, Beckman asked Grubb about the reduction in his salary. Beckman asserts that Grubb responded, "I'm not going to listen to some old fucker ask questions about everything I'm trying to do." Later, Beckman asserts that Grubb told him that he should be happy to have a job because Grubb could hire two younger, more aggressive people for less than KGP was paying Beckman. Grubb denies making these statements.

In January 2002, KGP again had to take steps to save money, including asking employees to take unpaid leave and implementing hiring and wage freezes. In February 2002, KGP decided to lay off more employees. During this third round of layoffs, KGP laid off Beckman. Since February 2002, KGP has made further reductions in its workforce. It has also hired employees, including former employees. It has not rehired Beckman.

After filing a charge with the Equal Employment Opportunity Commission, Beckman received his Notice of Right to Sue on May 23, 2002. On June 11, 2002, Beckman filed suit in this Court, alleging that KGP had discriminated against him on the basis of his age. KGP now moves for summary judgment, contending that there is no genuine issue of material fact that Beckman has failed to establish a prima facia case of age discrimination.

Beckman also asserted a claim against KGP for unpaid wages under Minn. Stat. § 181.13. In his memorandum in opposition to KGP's summary judgment motion, Beckman voluntarily dismissed that claim. Accordingly, Count III is dismissed with prejudice.

II. DISCUSSION

Summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that 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). In determining whether summary judgment is appropriate, a court must look at the record and any inferences to be drawn from it in the light most favorable to the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). The moving party "bears the initial responsibility of informing the district court of the basis for its motion," and must identify "those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the moving party satisfies its burden, Rule 56(e) requires the nonmoving party to respond by submitting evidentiary materials that designate "specific facts showing that there is a genuine issue for trial." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).

A. Age Discrimination

Beckman asserts claims of age discrimination under the ADEA and the MHRA. Both statutes make it unlawful for an employer to discharge or otherwise discriminate against an individual with regard to compensation and other terms and conditions of employment on the basis of age. See 29 U.S.C. § 623(a)(1); Minn. Stat. § 363A.02. A plaintiff may demonstrate age discrimination by either direct or indirect evidence. Fast v. S. Union Co., 149 F.3d 885, 890 (8th Cir. 1998). When a plaintiff puts forth direct evidence that age was used in the employer's decision to terminate the plaintiff, the burden-shifting standards of Price Waterhouse v. Hopkins, 490 U.S. 228 (1989), apply to an ADEA claim. Fast, 149 F.3d at 890. When a plaintiff is unable to put forth direct evidence of age discrimination, the burden-shifting standards set forth in McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973), apply to an ADEA claim. Fast, 149 F.3d at 890.

In this case, Beckman alleges that he is entitled to a Price Waterhouse analysis because he has direct evidence of KGP's discrimination. Direct evidence is evidence of conduct or statements by persons involved in the decision-making process that may be viewed as "directly reflecting the alleged discriminatory attitude" so that a reasonable fact finder could infer that "the attitude was more likely than not a motivating factor in the employer's decision." Gagnon v. Sprint Corp., 284 F.3d 839, 848 (8th Cir. 2002). Stray remarks in the workplace, statements by non-decisionmakers, or statements by decisionmakers unrelated to the decisional process itself are not direct evidence. Id.

Beckman claims that three statements made by Grubb are direct evidence of KGP's discriminatory attitude. Although Grubb denies making the statements, the Court assumes that the statements were made for the purposes of this motion. See Fed.R.Civ.P. 56. In addition, the Court assumes that Grubb, though not technically a decisionmaker, was a nondecisionmaker closely involved in the decisionmaking process. See EEOC. v. Liberal R-II Sch. Dist., 314 F.3d 920, 924 (8th Cir. 2002) (explaining nondecisionmaker's remarks could constitute direct evidence).

In his opposition memorandum, Beckman also relied on one statement by Dale Putrah, Sr., who asked Beckman: "Hey old man, you didn't go and slit your wrists or anything, have you?" Putrah was over 70 when he made the statement, and he made the remark shortly after Beckman's national sales manager position was consolidated with the director of business development position. Given these factors, Beckman's counsel conceded at oral argument that the statement was innocuous. The Court concurs.

The Court will discuss the three statements in turn. The first statement occurred when Grubb was discussing assigning accounts to Beckman. Grubb stated: "I guess I need to get you some accounts, or you'll be down the road, old man." When the remark was made, Grubb, like Beckman, was in his 50s, and Grubb said the remark after KGP had laid off some employees and consolidated Beckman's position with Grubb's position. For these reasons, the Court concludes that this statement was a stray remark made in the workplace, not direct evidence of discrimination. See Walton v. McDonnell Douglas Corp., 167 F.3d 423, 427 (8th Cir. 1999) (finding remark was not direct evidence, particularly when the speaker was over 60 at the time, and it was not made contemporaneously with the adverse employment decision). The second statement occurred in December 2001 when Beckman asked Grubb about his most recent pay reduction and receiving more account assignments. Grubb stated: "I'm not going to listen to some old fucker ask questions about everything I am trying to do." The third statement occurred shortly after the second comment was made. Grubb told Beckman that he should be happy with his accounts because "KGP could hire two younger, more aggressive salespeople for what [it was] paying [Beckman]." At the time the second and third remarks were made, KGP was once again restructuring its organization and implementing cost-saving measures such as asking all employees to take unpaid leave. When doing so, KGP did not hire younger, more aggressive sales people. Moreover, shortly after the remarks were made, Beckman was assigned more accounts, which he testified he found acceptable, and he was supported by Moser, with whom he had requested to work. Given the timing and the hypothetical tone of Grubb's remarks, the Court concludes that they are not direct evidence because they do not "directly reflect" any alleged discriminatory attitude attributable to KGP's decisionmakers. Instead, in order for such statements to show discriminatory intent, a series of inferences would need to be drawn before a discriminatory intent could be inferred. See Cronquist v. City of Minneapolis, 237 F.3d 920, 925-26 (8th Cir. 2001) ( citing Schleiniger v. Des Moines Water Works, 925 F.2d 1100, 1101 (8th Cir. 1991) and noting that "simply because a discriminatory reason might be inferred . . . does not mean that a mixed motive case exists").

Because Beckman has failed to present any direct evidence of KGP's discrimination on the basis of age, the Court will analyze his ADEA claim under McDonnell Douglas. Chambers v. Metro. Prop. Cas. Ins. Co., 351 F.3d 848, 855 (8th Cir. 2003). In addition, as instructed by the Minnesota Supreme Court, the Court will analyze Beckman's MHRA claim under McDonnell Douglas. See Erickson v. Farmland Indus., Inc., 271 F.3d 718, 724 n. 2 (8th Cir. 2001) (noting that the Minnesota Supreme Court has rejected the application of a mixed-motive analysis to MHRA claims); Anderson v. Hunter, Keither, Marshall Co., 417 N.W.2d 619, 626-27 (Minn. 1988).

B. Desert Palace

Beckman asserts that the McDonnell Douglas framework for ADEA claims has been modified by the Supreme Court's decision in Desert Palace, Inc. v. Costa, 539 U.S. 90 (2003). In Desert Palace, the Supreme Court analyzed part of the Civil Rights Act of 1991 and concluded that a Title VII plaintiff need not present direct evidence of discrimination to obtain a mixed-motive jury instruction. Desert Palace, 539 U.S. at 94. Beckman asserts that the holding of Desert Palace should be applied to both his ADEA and MHRA claims. He essentially argues that the ultimate effect of Desert Palace is that an employee no longer needs to establish pretext in order to survive summary judgment. Instead, Beckman argues that if an employee presents circumstantial or direct evidence of age discrimination, the burden of proof shifts to the employer to prove that it would have terminated the employee even if it had not considered the employee's age. In response, KGP asserts that Desert Palace is inapplicable because it applies only to jury instructions, not to the summary judgment motions. In addition, KGP argues that the case is inapposite because the ADEA, unlike Title VII, was not amended after the Supreme Court's decision in Price Waterhouse.

As this Court recently explained, courts have not been uniform in their application of Desert Palace. Brown v. Westaff (USA), Inc., __ F. Supp.2d __, 2004 WL 67654, at * 5 (D. Minn. Jan. 12, 2004) (discussing other courts' applications of Desert Palace). This Court is bound by United States Supreme Court and Eighth Circuit precedent. See Hood v. United States, 342 F.3d 861, 864 (8th Cir. 2003); Young v. Hayes, 218 F.3d 850, 853 (8th Cir. 2000). The Eighth Circuit has not reached the is sue of if, or how, the holding of Desert Palace impacts the McDonnell Douglas burden-shifting analysis for ADEA claims. Trammel v. Simmons First BankofSearcy, 345 F.3d 611, 615 (8th Cir. 2003) (discussing, without deciding, whether Desert Palace applies to ADEA claims); Alien v. City of Pocahontas, Ark, 340 F.3d 551, 558 n. 5 (8th Cir. 2003) (noting that the issue was not reached because there was no direct or circumstantial evidence of age or gender discrimination). Instead, the Eighth Circuit continues to analyze ADEA claims involving indirect evidence under McDonnell Douglas. See Erenberg v. Methodist Hosp., 357 F.3d 787, 793 (8th Cir. 2004); Hitt v. Harsco. Corp., 356 F.3d 920, 924 (8th Cir. 2004); Chambers, 351 F.3d at 855. Accordingly, the Court will analyze Beckman's ADEA claim under McDonnell Douglas. In addition, because the Minnesota Supreme Court has not adopted the Desert Palace decision and has rejected the use of a mixed-motive analysis to discrimination claims under the MHRA, the Court will analyze Beckman's MHRA claim under McDonnell Douglas. See Erickson, 271 F.3d at 724 n. 2. Therefore, the two claims will be analyzed together.

C. McDonnell Douglas Analysis

In this case, Beckman alleges that KGP discriminated against him on the basis of age when it consolidated his position, reduced his salary, and eventually terminated him. In advancing his case, Beckman does not treat each incident separately. Under McDonnell Douglas, Beckman must establish a prima facie case of age discrimination, at which point KGP must come forward with a legitimate nondiscriminatory reason for its conduct. Chambers, 351 F.3d at 855. In response, Beckman must then demonstrate that the nondiscriminatory reason offered by KGP was really a pretext for discrimination. Id.

During the relevant time period, KGP was experiencing significant financial distress. It was forced to institute at least two rounds of layoffs, consolidate positions, and ask employees to take unpaid leave and reductions in their salaries. Given these circumstances, the Court concludes that Beckman's case should be analyzed as a reduction-in-force (RIF) case. See Fast, 149 F.3d at 890. To establish a prima facie case of age discrimination resulting from a RIF, Beckman must show that: (1) he is 40 years or older; (2) he was qualified for the job; (3) he was discharged; and (4) age was a factor in KGP's decision to terminate him. Id. As the Eighth Circuit recently explained:

Replacement by a younger person is ordinarily sufficient circumstantial evidence to demonstrate that age was a factor in the termination decision, but not in a reduction in workforce case where those duties either have been eliminated or must be redistributed within the employer's remaining work force. Instead, to meet the prima facie burden in the reduction in force context, the plaintiff must come forward with some additional evidence that age played a role in his termination. A plaintiff may meet the last requirement by presenting either statistical evidence (such as a pattern of forced early retirement or failure to promote older employees) or circumstantial evidence (such as comments and practices that suggest a preference for younger employees).
Chambers, 351 F.3d. at 855-56 (citations omitted). The parties agree that Beckman established the first three elements of his prima facie case. They disagree over whether he established the fourth element. To establish the fourth element, Beckman relies on the three comments discussed above and the fact that KGP hired younger sales persons after it laid off Beckman.

Viewing the evidence in the light most favorable to Beckman, the Court concludes that there is no genuine issue of material fact that Beckman's evidence does not satisfy the fourth element of his prima facie case. With respect to KGP's decision to consolidate Beckman's national sales manager position with Grubb's director of business development position, Beckman has presented no evidence to show that his age was a factor in KGP's decision to name Grubb as the director of sales and business development. At the time the decision was made, both Beckman and Grubb were over 50. While both men had significant telecommunications experience, Grubb had some qualifications that Beckman did not have. Beckman has not presented any other statistical or alleged statements to show that Beckman's age factored into KGP's decision to place Grubb in the new position. Given these factors, Beckman has not established that age was a factor in KGP's consolidation decision.

With respect to the reductions in Beckman's pay, it is notable that the reductions occurred after Beckman returned to being an account representative. As an account representative, he had fewer responsibilities than he had as the national sales manager. Thus, it is logical that Beckman should receive less pay for a job in which he had fewer responsibilities. Grubb made the comments in connection with discussions about Beckman's salary and after Beckman's first salary decrease and near the time of Beckman's second decrease. While it is true the Beckman was the only employee asked to accept a reduction of salary in December 2001, it is also true that Beckman conceded that the second reduction brought his salary in line with the other sales representatives. Therefore, at the time Grubb made the statements, it was true that Beckman was being paid more than other sales representatives. Given these factors, Beckman has not establish that age was a factor in KGP's decision to decrease his salary.

With respect to his termination, Grubb's comments do not show that age played a factor in deciding to terminate Beckman, especially with taken in context with KGP's hiring decisions after 2002. Specifically, Beckman's reliance on the fact that KGP hired a "younger" person six months after it fired Beckman is unavailing. As of April 30, 2003, KGP had hired two sales persons after Beckman was laid-off. The first person, who was born in 1947, was hired to work in the Faribault, Minnesota office approximately six months after Beckman left KGP. The second person, who was born in 1946, was hired to work in a Texas office approximately nine months after Beckman left KGP. Given that Beckman was born in 1943, the hiring of these employees is not circumstantial evidence of age discrimination because neither of these employees is "sufficiently younger" than Beckman. See Schiltz v. Burlington Northern R.R., 115 F.3d 1407, 1412-13 (8th Cir. 1997). Moreover, neither sales person was hired to work in the Plymouth, Minnesota, office. Without more, Beckman has failed to establish that age was a motivating factor in KGP's decision to lay-off Beckman. For these reasons, Beckman has failed to establish a prima facie case of age discrimination.

Even if Beckman had established a prima facie case, KGP would be entitled to summary judgment because Beckman cannot show that KGP's nondiscriminatory reason for terminating Beckman was pretextual. KGP asserts that it terminated Beckman because it was experiencing financial pressures that forced it to engage in numerous layoffs, reorganizations, and hiring and wage freezes. To support this assertion, KGP offered deposition and statistical evidence. The deposition testimony shows that KGP, like the telecommunications industry as a whole, began experiencing severe financial pressure in mid-2001. The statistical evidence showed that KGP laid-off 31 employees during the relevant time period. The average age of those 31 employees was 38. In response, Beckman offers no arguments to show that KGP's proffered reason was pretextual.

Finally, even if Beckman's claims were analyzed under Price Waterhouse, the Court concludes that there is no genuine issue of material fact that KGP's employment decision would have been the same based on legitimate, nondiscriminatory reasons for laying off Beckman. "Under Price Waterhouse, once an employment-discrimination plaintiff has persuaded the fact finder that, more likely than not, discrimination was a motivating part in an employment decision, the defendant-employer can escape liability only by proving that the employment decision would have been taken in any event for legitimate, non-discriminatory reasons." Hutson v. McDonnell Douglas Corp., 63 F.3d 771, 780 (8th Cir. 1995) (citations omitted). KGP was under financial pressure to cut costs. Moser was covering Beckman's accounts as well as his own. Beckman remained at the company during two rounds of layoffs. Trevor and Tim Putrah testified that Beckman would have remained employed by KGP but for KGP's financial situation. That financial situation caused KGP to lay off Beckman because Moser could cover Beckman's accounts. Under these circumstances, the Court concludes that, assuming age was a motivating factor, Beckman would have been laid off in any event due to KGP's financial condition.

In short, there is no genuine issue of material fact with respect to whether KGP discriminated against Beckman on the basis of his age. When KGP hired Beckman, he was 54; when it laid him off, he was 59. Without more, there is no inference that KGP abruptly developed a discriminatory animus and discriminated against Beckman on the basis of his age. Cf. Grossman v. Dillard Dep't Stores, Inc., 109 F.3d 457, 459 (8th Cir. 1997) (determining that employer was entitled to judgment as a matter of law in part because "reasonable people [could not] swallow" that the employer developed discriminatory intent within four years of hiring plaintiff); Lowe v. J.R. Hunt Transp., Inc., 963 F.2d 173, 175 (8th Cir. 1992) (affirming district court's entry of a directed verdict, noting that was "simply incredible . . . that the company officials who hired him at age fifty-one had suddenly developed an aversion to older people less than two years later.")

III. CONCLUSION

Based on the files, records, and proceedings herein, and for the reasons stated above, IT IS ORDERED THAT:

1. KGP's Motion for Summary Judgment [Docket No. 12] is GRANTED.
2. Beckman's Complaint [Docket No. 1] is DISMISSED WITH PREJUDICE.

LET JUDGMENT BE ENTERED ACCORDINGLY.


Summaries of

Beckman v. KGP Telecommunications, Inc.

United States District Court, D. Minnesota
Mar 16, 2004
Civ. No. 02-1261 (JNE/JGL) (D. Minn. Mar. 16, 2004)
Case details for

Beckman v. KGP Telecommunications, Inc.

Case Details

Full title:John R. Beckman, Plaintiff, v. KGP Telecommunications, Inc., Defendant

Court:United States District Court, D. Minnesota

Date published: Mar 16, 2004

Citations

Civ. No. 02-1261 (JNE/JGL) (D. Minn. Mar. 16, 2004)