Adams, Kim v. IN Bell Tele Co. ( 2000 )

In the
United States Court of Appeals
For the Seventh Circuit
Nos. 98-1506, 98-2259 & 98-2307
Kim Adams, et al.,
Plaintiffs-Appellants,
Cross-Appellees,
v.
Ameritech Services, Inc. and
Indiana Bell Telephone Co., Inc.,
Defendants-Appellees,
Cross-Appellants.
and
Nos. 98-2426 & 98-2522
Deborah Allard, et al.,
Plaintiffs-Appellants,
Cross-Appellees,
v.
Indiana Bell Telephone Co., Inc.,
Defendant-Appellee,
Cross-Appellant.
Appeals from the United States District Court for the
Southern District of Indiana, Indianapolis Division.
Nos. IP 93-0420-C M/S &
IP 93-1346-C M/S--Larry J. McKinney, Judge.
Argued November 8, 1999--Decided October 23, 2000
Before Posner, Ripple, and Diane P. Wood, Circuit
Judges.
Diane P. Wood, Circuit Judge. Throughout the
decade of the 1990s, corporate downsizing was a
popular strategy for companies that believed they
had become indolent, complacent, inefficient, or
otherwise unsuited to the ever-increasing pace of
competition in their markets. Ameritech
Corporation was no exception. With the advent of
more competition in the telecommunications market
and the promise of much more change to come in
the near future, see Goldwasser v. Ameritech
Corp., 222 F.3d 390, 392-393 (7th Cir. 2000), its
management came to the conclusion in 1992 that
drastic measures were necessary if it was to
succeed in its new environment. And drastic
measures were taken. Both Ameritech Services,
Inc. (ASI), a company jointly owned by
Ameritech’s five independent operating companies,
and Indiana Bell Telephone Company, one of those
operating companies, slashed their middle
management ranks dramatically as part of a
comprehensive restructuring and reduction in
force.
The two cases we have consolidated for decision
today both arise out of these measures. In Adams
v. Ameritech Services Inc., Nos. 98-1506, 98-
2259, and 98-2307, the nineteen plaintiffs
remaining on appeal claim principally that both
ASI and Indiana Bell discriminated against them
on the basis of age, in violation of the Age
Discrimination in Employment Act (ADEA), 29
U.S.C. sec.sec. 621 et seq., and that both
companies violated their rights under sections
502 and 503 of the Employee Retirement Income
Security Act (ERISA), 29 U.S.C. sec.sec. 1132,
1133. In Allard v. Indiana Bell Telephone Co.,
Nos. 98-2426 and 98-2522, another set of 35
plaintiffs (plus two would-be plaintiffs to whom
the district court denied permission to opt in to
the case) claim the identical violations of the
law from the same basic course of conduct by
Indiana Bell alone; five of the Allard plaintiffs
also raise constructive demotion claims. We do
not fully understand why the district court
agreed to handle these intertwined cases as
separate matters, but, at least for purposes of
appeal, they are functionally identical. Unless
the context requires otherwise, our discussion
therefore applies with equal force to both cases.
With the exception of some incidental issues,
the district court disposed of all the claims in
a series of orders granting summary judgment for
the defendants. It then certified those orders as
final for purposes of appeal under Fed. R. Civ.
P. 54(b). While we appreciate the herculean
efforts the district court made to wade through
the voluminous materials on summary judgment that
both sides presented, we conclude that the
plaintiffs presented enough evidence to withstand
the defendants’ motions. We therefore reverse and
remand for further proceedings.
I
Ameritech is one of the regional telephone
companies that was created with the 1984 break-up
of the old American Telephone & Telegraph Company
system. It became the parent company of the five
Bell operating companies in Indiana, Illinois,
Michigan, Ohio, and Wisconsin. Those companies in
turn created and now own ASI in equal shares. ASI
exists to perform services for the operating
companies, including "access services"
(marketing, sales and service to long distance
companies), billing, finance, human resources,
information technology, and so forth. Ameritech
itself sponsors and administers the Ameritech
Management Pension Plan (the Plan), in which
employees of all the operating companies and ASI
participate. (Ameritech’s subsidiaries have some
responsibility for administering the Plan.)
Through 1992, both Indiana Bell and ASI
considered as part of their "management"
workforces all salaried, non-union employees,
from secretaries to company officers. Managers
were divided into Salary Grades (SG), which
reflected knowledge, skill level, and degree of
accountability. Jobs with duties that were
entirely pre-set were classified as SG1, while
jobs with complete independence in achieving
goals within company and budgetary constraints
were in the higher SG levels, for example, SG5
and above at Indiana Bell. (Administrative and
secretarial assistants were classified in a
slightly different system.) Not all jobs within
a particular salary grade were the same, however,
except insofar as the grade reflected increasing
degrees of decisionmaking authority.
Richard Notebaert became ASI’s president in June
of 1992, at a time when Ameritech as a whole was
seeking to improve its competitiveness. Shortly
before Notebaert took over his new job,
Ameritech’s operating committee began to discuss
what it perceived as a surplus of employees, and
it began to explore with ASI what to do about it.
It contacted the other Bell operating companies
and concluded that they too had a surplus. Both
ASI and Indiana Bell (along with the other
operating companies) decided that they had to
undertake a significant management workforce
reduction--in plain English, they had to get rid
of large numbers of managers, either by
persuasion or by force. We describe here the
process that the companies used and the structure
of the Plan; we save until later a consideration
of the arguments that age discrimination tainted
this process.
A. The Reductions in Force
To carry out its plans, Ameritech (working with
a consultant) designed a comprehensive workforce
reduction program. Ameritech eventually selected
a benefit enhancement package that calculated a
manager’s service pension eligibility as if she
had remained employed until December 31, 1994.
The package offered 2% of current pay for each
year of service, with a minimum of 8% and a
maximum of 50%. Under that package, about 80% of
the managers over the age of 50 were eligible for
a service pension, and managers began to become
eligible between the ages of 45 and 49.
After they received the consultant’s report,
Indiana Bell and ASI each designed its own
resizing program (though the two programs were,
for all intents and purposes relevant here,
identical). ASI hoped to reduce its management
workforce of 6,695 people by 15%; Indiana Bell
set a target for reducing its management force of
approximately 1,250 by 10%, or between 125 and
150 people. The companies planned on achieving
these goals with a combination of voluntary and
involuntary components. Ameritech as a whole
hoped that its management workforce of just over
21,000 would be reduced by 2,500 as of March 31,
1993, and by as much as 6,000 over the following
two to three years.
When the "resizing" was announced, employees
were told that if they voluntarily retired during
a six-month window (between August or September
of 1992 and March 1993), and if they signed a
waiver and release, they would receive the full
complement of benefit enhancements. If they did
not sign the waiver, they would receive a reduced
package of enhancements. In addition, at Indiana
Bell, employees in SG3 and lower grades were told
they could apply for available nonmanagement (or
craft) positions. Five of the Allard plaintiffs
chose that option.
The companies dubbed the involuntary termination
program the Company Resizing Program, or CRESP
for short. Gary Morris, an employee of ASI,
designed CRESP, which ASI then used. Indiana Bell
used a variant of CRESP that was developed by its
director for human resources, Robert T. McFeely.
The program took a three-stage approach.
Stage 1 was the "mechanical" phase in which
employees were placed in groups of similar skill
and salary level. At ASI, employees were placed
in 102 groups, with the basic salary groupings
being SG5 and below, SG6 to SG9, and SG 10 and
above. At Indiana Bell, employees in SG3 and
below were ranked together as were those in SG4
and SG5. (The workforce reduction of the few
Indiana Bell employees in SG6 and above was not
handled through this process.) Employees in the
groups were ranked and the lowest 30 to 35% of
each group--the "at risk" employees--was then
identified. (Volunteers were ranked on the "at
risk" list along with everyone else, because of
the chance that they might revoke their voluntary
retirement election.) In implementing the
mechanical rankings, ASI used the managers’ 1990
and 1991 merit pay data. (For ASI employees in
SG6 and above, an additional factor based on
leadership development and potential accounted
for 20% of the score.) At Indiana Bell the Stage
1 rankings were compiled using the most recent
evaluations of employees’ managerial skills and
"promotion potential," as well as their
performance over the past two years as indicated
by performance ratings, lump sum merit awards,
and salary target rates./1
After the initial Stage 1 lists were made,
higher level managers refined them, moving people
in and out of consideration for Stage 2; managers
were instructed to consider factors such as an
employee’s recent promotion or upgrade or
irreplaceable skill in making these
determinations.
Once the Stage 1 "at risk" lists were
finalized, the employees on those lists were
again evaluated. In Stage 2, management teams
met, discussed, and re-ranked the employees on
the "at risk" lists. For this purpose, ranking
groups were subdivided. At ASI, some of the
larger of the 102 CRESP groups were divided along
functional and/or geographic lines into smaller
groups of 30 to 35 employees. This resulted in
approximately 135 ranking groups during Stage 2
at ASI. ASI managers ranked employees in those
groups according to job skills, experience, and
knowledge; job performance, both in the immediate
and distant past; leadership criteria; and
"growth potential." At Indiana Bell, employees
were divided into eight subgroups--one for each
of SG1, SG2, SG4, and SG5, one for administrative
employees, and three for SG3. Indiana Bell
ranking teams were instructed to consider 1990-91
performance, pay, promotability and skills,
performance to date for 1992, and "Ameritech
Leadership Characteristics" (also known as
"breakthrough leadership characteristics").
Morris added "growth potential" to the Stage 2
evaluation factors in August 1992. CRESP training
materials defined this term to include both
"advancement potential" and "potential to grow
and change with the business." Morris explained
that he assumed that older people would score
lower on that point. As he put it, older people
tended to be ranked lower on that factor "due to
the fact that there was a relationship between
age, not in merit, but age and the potential
appraisal piece." He further indicated that older
people "have less potential to move upward. They
are at the position they basically should be."
Other evidence indicated that a variation of the
"growth potential" criterion was initially
developed as part of AT&T’s managerial appraisal
system in order to predict how successfully an
employee could operate at a higher responsibility
level.
Rankers discussed their personal experiences
with the at-risk managers, and looked at the
managers’ current performance. At Indiana Bell,
for example, ranking committees divided each
ranking group into three subgroups, discussing
those employees in the bottom third in depth.
They then gave numerical rankings to the bottom
subgroup. At both companies, raters took notes
about the ranked employees, but most of those
notes were destroyed. Once the committee ranking
process was complete, ASI and Indiana Bell
company officers moved on to Stage 3, in which
they decided how many of the ranked managers in
each salary grade and department would be
terminated involuntarily. They did so by drawing
lines on the lists as they stood after the re-
ranking process.
In the end, ASI let go 1,320 managers (19.72%).
Of those, 591 volunteered, with 200 of the
"volunteers" deciding to do so only after they
found out they had been selected for termination.
Of the 1,320, 894 (67.73%) were 40 or older.
Looking for the moment at its managerial ranks as
a whole (though we discuss below the question
whether this is a proper lens through which to
view this process), ASI selected for termination
12.63% of those aged 40-44, 16.71% of those aged
45-49, 24.58% of those aged 50-54, and 29.19% of
those aged 55 and older.
Indiana Bell’s total workforce of 1,261
management employees was reduced by 223 through
the resizing program. Of the 1,192 employees in
the lower salary grades (SG5 and below), 152 took
voluntary retirement, 34 transferred to non-
management positions, and 48 were voluntarily
terminated. Of the 223 total managers who left
the company, 203 were over 40, and of the 59
total employees involuntarily terminated, 56 were
over 40.
B. The Pension Plan
Both Indiana Bell and ASI provided pension
benefits for their management employees through
the Ameritech Management Pension Plan. Benefits
under the Plan were available depending on both
the chronological age an employee had reached and
years in service. A service pension was thus
available to an employee who was either 65 years
old with 10 years of service, 55 years old with
20 years of service, 50 years old with 25 years
of service, or any age with 30 years of service.
For employees who did not qualify for a service
pension, there was a deferred vested pension
right. The requirement for that was five years of
service, but not enough to qualify for the
service pension. No pension of any kind was
available for an employee with less than five
years of service.
Participants in the Plan received their benefits
in one of three ways: a single life annuity, a
joint and survivor annuity, or a lump sum
payment. To receive the last of these, the
employee had to make an election within a
specified time. In order to determine the proper
amount of the lump sum, the company applied the
Pension Benefit Guaranty Corporation (PBGC)
annuity discount rate in effect on January 1 of
the year in which the employee left the company.
Alternatively, an employee eligible for a service
pension could defer payment of a lump sum until
January 1 of the year following retirement. In
that event, the company would apply the PBGC rate
in effect on January 1 of that year rather than
the year of retirement. The lower the discount
rate (i.e., the more optimistic the PBGC’s
assumptions about inflation were), the higher the
lump sum payment.
The PBGC rate on January 1, 1992, was 6.5%; the
rate in effect on January 1, 1993, was 5.75%. At
Indiana Bell’s termination meetings, the company
gave employees information about how those
eligible for service pensions could elect a lump
sum up to 30 days following termination. The
company also provided information about the
deferral process and explained that deferral had
to be requested before leaving the payroll.
The Plan spells out a specific written
administrative review and appeal process.
According to the Summary Plan Description,
exhaustion of remedies is required: "[T]he plan
provisions require that you pursue all your claim
and appeal rights described above before you seek
any other legal recourse regarding claims for
benefits or net credited service or vesting
service."
C. Age-Related Statements
The principal theories on which both sets of
plaintiffs rely relate to the way in which the
lay-offs were orchestrated and the interrelation
between those selected for termination and their
age and pension status (which the plaintiffs
assert created a strong financial incentive to
terminate people below the chronological age
thresholds set by the Plan). In addition, the
plaintiffs point to other direct or
circumstantial evidence that they believe reveals
that age bias lay behind the two companies’
decisions. A sample of these statements includes
the following:
Ameritech’s president, William Weiss, called for
broad changes to "reinvigorate" the company, and
another member of senior management commented
that the company needed to be "ventilated."
Thomas Reiman, Indiana Bell’s president, stated
during his first videotaped conference as
president: "The business will absolutely dry up
and die if we don’t have a continued influx of
new young crazy people in our business. And we’re
going to find a way to do that."
Robert Knowling, upon becoming general manager of
one of Indiana Bell’s business customer support
groups at age 36, commented that he was "aghast
when he came into the department and found 12
white middle-aged managers working for him."
Ranking documents that were not destroyed
described one 59-year-old employee as "retired in
place" and a 61-year-old employee as "old
school."
Jim Goetz (age 35), who served as a coordinator
during the 1992 selection process for ASI,
discussed the reorganization in a company video
made on September 10, 1993. Stressing the fact
that the company would be hiring significant
numbers of people from the outside despite the
recent terminations, Goetz said "some of this
[new hiring] you’ll see are just analysts, entry-
level analyst jobs where we want to get back and
start bringing in some folks that are under 45
years old." Later, apparently having been prodded
by a colleague, Goetz attempted to clarify that
remark by saying, "My comment earlier regarding
looking for people under 45, all I meant is that
we want to be open to hiring people from colleges
again, that’s all I mean."
II
Initially, this was one lawsuit, brought on
March 30, 1993, by former employees of both
companies. On October 4, 1993, a second amended
complaint was filed in Adams and a new complaint,
brought by 34 former Indiana Bell employees, was
filed in Allard. (Several of the Allard
plaintiffs had been parties to the Adams
litigation; upon the filing of the Allard
complaint, they withdrew.)
The district court ultimately granted summary
judgment in favor of the defendants on almost all
the claims the plaintiffs were presenting.
Specifically, it found in defendants’ favor on
(1) the plaintiffs’ claim that both companies had
engaged in a pattern or practice of age
discrimination, (2) each individual plaintiff’s
separate ADEA claim for disparate treatment, (3)
the constructive demotion claims (Allard only),
(4) the ERISA claims under sec.sec. 502, 503,
510, and (5) the state law wage and trade
defamation claims. Along the way, however, the
court had ruled that the waivers of ADEA claims
were invalid under the Older Workers Benefit
Protection Act of 1990 (OWBPA), Pub. L. No. 101-
433, 104 Stat. 978, codified at 29 U.S.C.
sec.sec. 621, 623, 626, for employees who signed
after being terminated. It also dismissed Count
II of Indiana Bell’s counterclaim in Allard,
which had sought damages resulting from the
plaintiffs’ breach of their waiver agreements
with respect to the non-ADEA claims, and denied
ASI leave to add a similar count to its
counterclaim in Adams.
This left for resolution only the claims in
Count I of the Adams defendants’ amended counter-
claim (which seeks restitution from those
plaintiffs who received compensation in exchange
for their release of their potential ADEA
claims), two of the individual Adams plaintiffs’
state law wage claims for pre-termination
vacation pay, and in Allard Indiana Bell’s claim
for restitution remains in the district court.
The district court certified the remaining
decisions for immediate appeal under Rule 54(b).
III
A. Age Discrimination Claims
1. Legal Standards for Proof
The Supreme Court’s most recent pronouncement on
the legal standards a plaintiff must meet in
order to prove a case of age discrimination
appears in Reeves v. Sanderson Plumbing Products,
Inc., 120 S. Ct. 2097 (2000). In Reeves, the
Court began by reiterating that in such cases,
"liability depends on whether the protected trait
(under the ADEA, age) actually motivated the
employer’s decision." Id. at 2105, quoting Hazen
Paper Co. v. Biggins, 507 U.S. 604, 610 (1993).
That is, it continued, "the plaintiff’s age must
have actually played a role in [the employer’s
decisionmaking] process and had a determinative
influence on the outcome." 120 S. Ct. at 2105,
quoting Hazen Paper at 610 (bracketed text in
Reeves). Like our case, Reeves dealt with a claim
of disparate treatment on account of age. In
addition to those claims, our case also involves
claims of an unlawful pattern or practice of
discriminating on the basis of age, which, as the
Supreme Court observed in International
Brotherhood of Teamsters v. United States, 431
U.S. 324 (1977), is another theory of intentional
discrimination, under which the plaintiff bears
the burden of showing "by a preponderance of the
evidence that [age] discrimination was the
company’s standard operating procedure--the
regular rather than the unusual practice." Id. at
336.
Courts have sometimes struggled with the proper
way to apply these different approaches to
reduction-in-force, or RIF, cases. They note the
obvious point that adverse actions, in the form
of job loss, are inevitable for some people in
RIF situations, and that the corporation is
taking the action for general efficiency reasons.
We have explained on several occasions, however,
that the fundamental analysis of RIF cases is no
different from the analysis appropriate to other
forms of discrimination. See, e.g., Thorn v.
Sundstrand Aerospace Corp., 207 F.3d 383, 386
(7th Cir. 2000); Bellaver v. Quanex Corp., 200
F.3d 485, 493-94 (7th Cir. 2000). In Bellaver, we
acknowledged that it makes no sense in a RIF case
to require the plaintiff to show that the job
remained open. Instead, the plaintiff must show
that "the employer carried out the RIF in a
discriminatory way." 200 F.3d at 494.
Conceptually, one can think of a RIF as a
situation (not unlike "zero-based budgeting") in
which the employer decides whom from a defined
group it will "re-hire" or retain, considering
all existing employees as roughly like applicants
for retention. See Matthews v. Commonwealth
Edison Co., 128 F.3d 1194, 1195 (7th Cir. 1997).
Discriminatory hiring practices have been
analyzed for years under the various frameworks
we have described, and RIFs do not require
anything significantly different.
2. Use of Statistical Evidence
In a discrimination case proceeding under a so-
called disparate impact theory, statistical
evidence is obviously of central importance,
because in such a case the plaintiff is trying to
show that a particular job requirement has a
differential impact on a defined protected group.
But, as the district court correctly held,
disparate impact is not a theory available to age
discrimination plaintiffs in this circuit. See,
e.g., Maier v. Lucent Technologies, Inc., 120
F.3d 730, 735 & n.4 (7th Cir. 1997); EEOC v.
Francis W. Parker School, 41 F.3d 1073, 1077-78
(7th Cir. 1994). See also Blackwell v. Cole
Taylor Bank, 152 F.3d 666, 672 (7th Cir. 1998)
(citing cases on both sides of issue from various
circuits). We must therefore consider the ways in
which statistical evidence can be brought to bear
in a disparate treatment or "pattern or practice"
case.
Our general framework in this connection is set
forth in the Supreme Court’s decisions about the
admissibility of expert testimony, like the
statistical evidence proffered here. The leading
case, mysteriously not cited in the plaintiffs’
briefs, is Daubert v. Merrell Dow
Pharmaceuticals, Inc., 509 U.S. 579 (1993).
Daubert made clear that expert testimony should
not be considered in a case unless the expert has
genuine expertise (there, scientific knowledge)
and that expertise will assist the trier of fact
to understand or determine a fact in issue. Id.
at 592. The Court elaborated on Daubert’s
framework in Kumho Tire Co. v. Carmichael, 526
U.S. 136 (1999). The twin requirements for expert
testimony, as it explained in Kumho Tire, are
relevance and reliability. The expert must
"employ[ ] in the courtroom the same level of
intellectual rigor that characterizes the
practice of an expert in the relevant field." Id.
at 152. The trial court, exercising its
gatekeeping function, must examine (among other
things) the expert’s qualifications, the
methodologies she used, and the relevance of the
final results to the questions before the jury.
We review the district court’s decisions
deferentially, see General Electric Corp. v.
Joiner, 522 U.S. 136 (1997).
At the threshold, the defendants have questioned
whether statistical evidence as a whole can ever
be useful in a case alleging disparate treatment
or a discriminatory pattern or practice, as
opposed to a disparate impact case. The short
answer is yes: statistical evidence can be very
useful to prove discrimination in either or both
of those two kinds of cases, but it will likely
not be sufficient in itself. See generally David
C. Baldus and James W.L. Cole, Statistical Proof
of Discrimination, sec.sec. 9.02, 9.42 (1980).
The Supreme Court discussed the use of
statistical evidence in a pattern or practice
case in Hazelwood School District v. United
States, 433 U.S. 299 (1977), in which the Court
approved of the use of statistics to help show
that the school district was discriminating on
the basis of race in its faculty hiring
decisions. See id. at 307. Hazelwood also
underscored the importance of looking to the
proper "community" or group when making
statistical comparisons. The relevant labor
market was a question of fact for the trial court
to consider, although it was probably something
like the market for school teachers in the area.
Id. at 310-12. Further emphasizing the factual
nature of this inquiry, the Court also held that
the employer school district was entitled to an
opportunity to rebut any inference of
discrimination raised by the plaintiffs’
statistical showing. Id. at 309-10.
The Court returned to the topic of statistics
in Bazemore v. Friday, 478 U.S. 385 (1986).
Bazemore involved both a pattern or practice
claim brought by the United States and individual
plaintiffs’ discrimination claims, all arising
out of alleged racial discrimination in
employment and the provision of services by the
North Carolina Agricultural Extension Service.
The court of appeals had rejected the plaintiffs’
statistical evidence because it had not taken
into account every factor that might have
affected the employees’ salary levels. The
Supreme Court disagreed, holding both that the
statistical study should have been admitted and
that "[n]ormally, failure to include variables
will affect the analysis’ probativeness, not its
admissibility." Id. at 400. The Court also noted
that the statistical evidence had to be evaluated
in the light of the remaining evidence in the
record.
This court, too, has had a number of
opportunities to discuss the use of statistical
evidence. In Radue v. Kimberly-Clark Corp., 219
F.3d 612 (7th Cir. 2000), we upheld summary
judgment for an employer in an ADEA case where
the employee’s prima facie case was primarily
composed of statistics that showed that older
employees were treated less favorably than
younger employees in various RIFs the employer
had carried out. But those statistics were flawed
in a number of ways, and the plaintiff had little
else with which to support his case. For one
thing, the statistics looked at a completely
different part of the company from the one in
which the plaintiff worked and they involved an
earlier RIF, not the one in which the plaintiff
lost his job. Id. at 616. For another, the
statistics failed to address the essence of the
plaintiff’s claim: he did not allege that the RIF
was age-based; he claimed instead that the
transfers awarded in the wake of the RIFs were
given preferentially to younger employees. Id.
Finally, the court noted that the statistics
standing alone could not prove causation; they
could only show a relation between the employer’s
decisions and the affected employees’ traits. Id.
See also Tagatz v. Marquette Univ., 861 F.2d
1040, 1044 (7th Cir. 1988) ("Correlation is not
causation.").
There is no presumption that statistical
evidence has no useful role to play in disparate
treatment employment discrimination cases--
indeed, we are hard pressed to see how anyone
could take such a position consistently with the
Supreme Court’s guidance on the matter and this
court has not done so.
Thus, for example, this court in Mister v.
Illinois Central Gulf Railroad Co., 832 F.2d 1427
(7th Cir. 1987), the plaintiffs successfully
relied on a statistical showing that the railroad
hired a much larger proportion of white
applicants than African-American applicants to
prove disparate treatment. The employer, ICG, had
complained that the data was based on inaccurate
assumptions about the labor market, but we
rejected that criticism because the expert had
used the best data available, which had come from
ICG itself. Id. at 1430. The opinion then
discussed at some length what one can learn from
statistical evidence and what its limitations
are. Id. at 1430-31.
Studies in employment discrimination cases
typically begin by defining the relevant labor
market, and then ask what the results would be
for the salient variable (race in Mister, age in
our case) if there were no discrimination. That
is called the "null hypothesis." If the relevant
market is 40% African-American, for instance, one
would expect 40% of hires to be African-American
under the null hypothesis. If the observed
percentage of African-American hires is only 20%,
then the statistician will compute the "standard
deviation" from the expected norm and indicate
how likely it is that race played no part in the
decisionmaking. Two standard deviations is
normally enough to show that it is extremely
unlikely (that is, there is less than a 5%
probability) that the disparity is due to chance,
giving rise to a reasonable inference that the
hiring was not race-neutral; the more standard
deviations away, the less likely the factor in
question played no role in the decisionmaking
process. See Hazelwood, 433 U.S. at 308 n.14;
Castaneda v. Partida, 430 U.S. 482, 496 n.17
(1977); see also Tagatz, 861 F.2d at 1044
(discussing the "significance of statistical
significance"); Palmer v. Schultz, 815 F.2d 84,
90-97 (D.C. Cir. 1987) (discussing cases and
forms of statistical proof). See generally Baldus
and Cole, supra, sec. 9.03 (1980 & Supp. 1987).
Mister also noted the importance of making sure
that any testing adequately accounts for the real
variables that the employer took into account.
The plaintiffs’ evidence there was wanting
because it assumed that the job applicants were
identical in every respect except for race, even
though other factors like physical condition,
employment history, or other non-racial variables
might have entered into the employer’s calculus.
832 F.2d at 1431; see also Tagatz, 861 F.2d at
1044. But, importantly, it was the ICG that had
the responsibility of offering alternative
explanations. The only one it actually advanced
was that it was concerned about the distance its
employees had to travel to get to the job site;
for reasons pointed out in the opinion, this was
singularly unpersuasive. (It is also important to
note that Mister reached this court after a full
trial on the merits; nothing in the opinion
suggests that the plaintiffs’ statistical showing
was so weak that summary judgment for the
defendant would have been appropriate.)
3. Exclusion of Wertheimer Reports
We are now in a position to consider whether,
under the Daubert standards, the statistical
evidence plaintiffs have offered in the two cases
before us (coupled with the other evidence they
presented) was sound enough methodologically
(i.e., reliable enough) and relevant, such that
the district court should have taken it into
account in evaluating their claim. Several points
are important to bear in mind. First, the
question before us is not whether the reports
proffered by the plaintiffs prove the entire
case; it is whether they were prepared in a
reliable and statistically sound way, such that
they contained relevant evidence that a trier of
fact would have been entitled to consider. No one
piece of evidence has to prove every element of
the plaintiffs’ case; it need only make the
existence of "any fact that is of consequence"
more or less probable. See Fed. R. Evid. 401
(emphasis added). See also, e.g., United States
v. Porter, 881 F.2d 878, 887 (10th Cir. 1989)
("’An item of evidence, being but a single link
in the chain of proof, need not prove
conclusively the proposition for which it is
offered. . . . It is enough if the item could
reasonably show that a fact is slightly more
probable than it would appear without that
evidence. . . . A brick is not a wall.’"),
quoting McCormick on Evidence, sec. 185 at 542-43
(E. Cleary 3d ed. 1984) (footnotes omitted). Put
a little differently, the issue is whether the
criticisms of the Wertheimer reports and the
plaintiffs’ other statistical evidence affected
the admissibility of those materials, or only, as
the Supreme Court put it in Bazemore, their
"probativeness" or weight.
Second, the question before the district court,
and before us on de novo review from the summary
judgments, is not whether we find one set of
expert reports more persuasive than another. See
Casey v. Uddeholm Corp., 32 F.3d 1094, 1099 (7th
Cir. 1994); Roberts v. Sears, Roebuck & Co., 723
F.2d 1324, 1338 (7th Cir. 1983). It is whether,
taking the facts in the light most favorable to
the plaintiffs, a trier of fact should be
permitted to make that choice.
Third, embedded within the debate about the
relative merit of the plaintiffs’ versus the
defendants’ experts are a number of factual
issues. One is the same kind of question that
concerned the Supreme Court in Hazelwood: what is
the proper level of aggregation or disaggregation
at which ASI’s and Indiana Bell’s actions should
be assessed? At one extreme, one could perhaps
look at the two companies’ entire workforces,
management and non-management alike; at the other
extreme, one could take a highly individualistic
view of humanity and conclude that no two people
are exactly alike and statistics are therefore
worthless. Neither approach has much to recommend
it, of course, but the thought experiment
suggests the outer possibilities.
What Wertheimer did, briefly put, was to
examine the correlations that existed between the
ages of employees and the companies’ decisions to
terminate. What he did not do (and, as far as we
can tell, what the defendants’ experts did not do
either) was to run a multiple-regression analysis
that would have isolated the relevance of age as
a factor in the companies’ decisions. While this
omission strikes us as odd, we are not prepared
to hold as a matter of law that nothing but
regression analyses can produce evidence that
passes the Daubert and Kumho Tire thresholds.
Statisticians might have good reasons to look at
data in different ways. (For example, as
additional variables are introduced into a
regression, the less likely it is that any of
them will be statistically significant, a fact
that causes its own problems.) We thus evaluate
here what Wertheimer did, rather than
hypothetical tests that he or another expert
might have done.
In the ASI reports, Wertheimer initially grouped
all management employees together and did an
aggregated study, while the defendants’ expert
focused on each particular CRESP group, even
though some of those groups were as small as 30
people. Next, in his "rebuttal" report,
Wertheimer looked at groups across the 13 vice-
presidential groupings, which (according to
defense expert McCabe) "reflect[ed] the different
activities that are the responsibilities of these
vice presidents." Also in the rebuttal report,
Wertheimer both criticized the CRESP groups as
being too small to serve as meaningful sets for
analysis, and he pointed out that even a CRESP-
oriented analysis showed significantly higher
selection rates for terminations of older
workers. Finally, in a "declaration" that also
addressed McCabe’s conclusions, Wertheimer
analyzed the data by salary group, looking
particularly at Stage 1 of the process.
We summarize here Wertheimer’s findings at each
of those levels. After making some comparisons
between the age profile of ASI’s workforce as a
whole and that of the entire country (which we do
not find particularly useful and thus disregard),
he calculated the termination rates of employees
by age. He did this by dividing the number of
terminated workers in each age category by the
number of workers in that category before the
terminations. The results for the November 1992
terminations were as follows:
Age < 30: 6.2% Age 45-49: 12.6%
Age 30-34: 9.9% Age 50-54: 12.5%
Age 35-39: 9.9% Age 55-59: 9.5%
Age 40-44: 10.5% Age 60-64: 26.3%
Table D-2, Wertheimer Report.
Another way he reviewed the same data was to
compare the share of terminations accounted for
by employees at least age 40 with the share of
the under-40 group: the former accounted for
62.6% of the 1992 terminations, even though they
were only 58.1% of the workforce. For the 1993
terminations, the differences were greater:
employees at least 40 accounted for 79.3% of the
terminations, but only 61.3% of the workforce.
Last, in this report he considered the way that
the selection process worked to see how the
designation of the at risk employees in Stage 1
and the termination candidates at Stage 2
correlated to age. At Stage 1, the selection rate
for the under-40 employees was 28.6%, and for the
older employees it was 35.3%; at Stage 2 the
selection rate for the younger group was 38.1%,
compared with 46.7% for the older employees.
These differences exceeded two standard
deviations and, Wertheimer concluded, were thus
statistically significant. (By that, he meant
that the probability that the difference would
have been observed even if the hypothesis being
tested were false is less than 5%. Most likely,
some other factor--perhaps age, perhaps something
else correlated to age--explains at least some of
the difference.)
Perhaps, however, there were non-age-related
differences among the management employees as a
whole that should have been taken into account,
as McCabe argued. Recall that ASI and Indiana
Bell defined management very broadly, to include
practically all white-collar workers.
Wertheimer’s rebuttal report was also before the
district court. In it, he criticizes McCabe’s use
of CRESP groups on the ground that at least many
of them were too small to yield useful
information. He pointed out that 69.6% of the
CRESP groups had fewer than 50 employees. When
samples are that small, he argued, it is hard to
find statistically significant differences
between two selection rates. (This statement
necessarily assumes that the smaller groups are
not the appropriate reference groups; a large
group cluttered with too many unlike individuals
is not preferable to a smaller group of similarly
situated people.) Wertheimer opined that one
would need at least 300 employees in a CRESP
group to be confident that useful information
about the Stage 1 selection rate for older
employees could be detected. (Aside from
reflecting the truism that it is always better to
have more data than less, this comment does not
tell the full story; there are statistical
techniques that can be used for small samples,
although neither Wertheimer nor the defendants’
experts appear to have used them.) Only four
CRESP groups met Wertheimer’s preferred size
criterion.
Wertheimer’s rebuttal also analyzed the
selection rates for employees by vice-
presidential group and by age within each group.
That exercise showed that selection rates were
higher for managerial employees at least age 40
in 12 out of the 13 groups. The difference was
statistically significant in six of those 12
categories, in the sense that there was a small
(less than 5%) probability that the difference
was due to chance. His later declaration did much
the same thing, using salary groups instead of
vice presidential groups.
Wertheimer’s work on the Indiana Bell reports
was similar. Initially, he analyzed the
managerial workforce as a whole and found that a
disproportionate number of older managers were
selected for termination. Once again, in a
rebuttal report he criticized the fragmentation
he found in the McCabe study, which for Indiana
Bell subdivided the employees in question into
salary grades and some sub-grades, and then made
seven comparisons for each group. Again, this led
to very small groups and subgroups, with 28%
containing fewer than 10 employees. In
Wertheimer’s view, the final result of the
Indiana Bell process was the proper focus. He
also analyzed the selection rates of the Indiana
Bell managers by overall salary grade level,
however, looking at the end result for each
salary grade rather than after each of the seven
steps along the way to determining who would be
let go. This process showed that age correlated
with the results. In the SG1 group, no employees
below age 40 were selected for termination, while
25% of those 40 and above were selected. This
difference was also statistically significant, in
the sense that it meant that there was less than
a 5% chance that it was explainable by chance.
There is far more detail in the record, but
this description is enough to give an idea of
what Wertheimer was doing. The district court
found his reports inadmissible for several
reasons: (1) the underlying information about the
RIF programs was not reliable; (2) the reports
only showed that the difference in treatment
between the over and under 40 aged individuals
was not due to chance, but they did not
affirmatively indicate what caused that
difference; (3) the analysis did not take into
account or control for other non-age related
variables; (4) Wertheimer relied on the
plaintiffs’ description of the RIF and did not
himself become familiar with the procedures used;
and (5) the jury would find the reports so
confusing that they should be excluded under Rule
403.
The underlying information about the RIF came
from the defendants ultimately, and as such we
see no problem in Wertheimer’s decision to rely
on it. Nor do we see anything wrong in the way
Wertheimer familiarized himself with the process.
The more serious objections the court had were
its second, third, and fifth. The theme of
numbers two and three was that Wertheimer’s
analysis, standing alone, was not enough to show
that age was the reason why ASI and Indiana Bell
took the actions that they did. That much is
true: the statistical analyses were enough to
rule out chance, but the real reason for the
decisions may have been age or it may have been
some other factor or factors positively
correlated with both advancing age and the
likelihood of termination. But ruling out chance
was an important step in the plaintiffs’ proof,
even if it was not a single leap from the
starting line to the finish line. If this is all
the plaintiffs had introduced, we would agree
with the district court that the record would
have supported summary judgment against them. It
was not, however, and in our view the other items
of evidence, if believed by a jury, could have
done the rest of the job: that is, it could have
ruled out factors other than age.
Importantly, however, the "other factor" cannot
itself be something that is a euphemism or proxy
for age discrimination. Morris’s assumption that
people over 40 are already working in the highest
job they will ever reach could be viewed by a
trier of fact as just such a stereotype. A trier
of fact might conclude that it and its analogues-
-"advancement potential" and "growth potential"--
infected the process of determining who would be
terminated in the downsizing, meaning that covert
age discrimination was at play. (Taking the
inferences from this statement in the light most
favorable to the plaintiffs, it reflected
Morris’s ex ante assumption that older people
have no growth potential; we realize that a trier
of fact might also construe it as an innocuous ex
post observation that there is a correlation
between people whose growth potential has been
exhausted and older workers, but at this stage we
cannot draw inferences in favor of the party
moving for summary judgment.)
The disputes that the parties have highlighted
between Wertheimer and McCabe (and among the
other experts on both sides) went to the weight
of the evidence each was presenting, not to its
admissibility. Once Wertheimer was analyzing vice
presidential groups or salary groups, he was
talking about people sufficiently similarly
situated that general conclusions could be drawn.
Indeed, this is exactly what ASI and Indiana Bell
argue when they challenge the district court’s
decision that the waivers certain employees
signed did not comply with the OWBPA. The
district court found the waivers invalid in part
because the waivers referred only to the salary
grades of individuals eligible for or selected
for the termination program, not their precise
job titles. The specificity of job titles was
necessary given the purpose of that statute,
according to the district court. ASI and Indiana
Bell objected, defending the utility of the
salary grade information. So, at least in some
contexts, even the companies believed that salary
grades were the appropriate groupings to use.
Last, we address the district court’s
alternative ruling that the statistical evidence
should be excluded under Fed. R. Evid. 403. We
would be more receptive to this possibility if it
were not for two problems. First, while it is not
unheard of to exclude evidence under Rule 403 at
the summary judgment stage, see, e.g., Weit v.
Continental Illinois Bank & Trust Co., 641 F.2d
457, 467 (7th Cir. 1981), normally the balancing
process contemplated by that rule is best
undertaken at the trial itself. Second, we simply
cannot tell from this distance whether the
court’s Rule 403 decision would have been the
same or not, if it had recognized the limited but
important role the plaintiffs’ statistics could
play. As the court reconsiders the case on remand
in accordance with this opinion, and particularly
if the case goes forward to a trial, it will be
free to re-weigh the admissibility question under
Rule 403 and come to a fresh conclusion. In the
short term, however, it must also bear in mind
that the Supreme Court’s recent decision in
Reeves was a cautionary note not to grant summary
judgment too readily when facts are susceptible
to two interpretations, and not to dismiss as
irrelevant damaging remarks like the one there
(plaintiff so old he "must have come over on the
Mayflower," 120 S. Ct. at 2110), or, in our case,
Goetz’s proclaimed desire to hire people under
the age of 45.
The appeal we have before us, we reiterate,
came from a decision to grant summary judgment.
We do not rule out the possibility that either or
both companies will be able to prevail before a
trier of fact. We hold only that this evidence
met the standards of admissibility set by the
Federal Rules of Evidence and thus should have
been counted on plaintiffs’ side for summary
judgment purposes.
4. Other Evidence
It is critically important that the plaintiffs
had other evidence to satisfy other parts of
their prima facie case. Wertheimer also studied
the question why ASI and Indiana Bell would have
had a motive to engage in intentional
discrimination against older workers. The answer,
briefly, lay in the structure of the Ameritech
pension plan. Unlike the plan in Hazen, which was
phrased only in terms of years of service, the
Ameritech Plan used chronological age as an
important variable in determining pension
eligibility. By terminating employees who had not
yet reached age 55, for instance, Ameritech was
able to cut off the possibility of their moving
from the "deferred vested pension" category to
the service pension category. For ASI, Wertheimer
calculated that the pension system gained
$32,686,607 by terminating deferred vested
pension employees, while it lost $4,896,505 by
terminating "extra 2 service pension employees"
and $8,518,087 by terminating regular service
pension employees, for a net gain of $19,272,016.
The net gain to the pension system from Indiana
Bell’s terminations was $1,202,689, according to
Wertheimer.
The plaintiffs also had evidence showing that
the CRESP program itself may not have been age
neutral in design or implementation. This ranged
from the explicit comments about the desire to
change the demographic make-up of Ameritech’s
workforce, to possibly tainted criteria (i.e.,
the "potential" factors), to (suspicious)
destruction of evidence. We are not concerned
about remarks to the effect that the company
needed to be "reinvigorated" or "ventilated." As
we have commented in other cases, there is no
reason why those goals cannot be accomplished
with talented older workers or with talented
younger workers. Reiman’s comment about wanting
"new young crazy people" is harder to sanitize,
especially because as president it would be hard
to say he was not in the direct decisionmaking
line for the structuring of a company-wide
restructuring program. Worst of all was Goetz’s
explicit statement that ASI wanted to go out and
hire people under the age of 45 again. True,
Goetz tried to limit the damage by spinning the
remark into one that expressed a desire to hire
from colleges again, but a trier of fact could
find that this recharacterization did little to
change the meaning. We note that statistics
published by the National Center for Education
Statistics at the U.S. Department of Education
indicate that only about 8% of the students
enrolled full-time in institutions of higher
education in 1993 were over 35 years of age
(643,000 out of a total of 8,128,000). Digest of
Educational Statistics, 1999, 204, Table 177. As
of 1997, looking at undergraduate students 40 and
over in two- and four-year degree granting
institutions, a mere 3.4% were 40 and over. Id.
at 205, Table 178. These numbers and a little
common sense suggest that a trier of fact could
see a desire to hire "from colleges" and a desire
to hire "under 45-year-olds" as equivalents.
The district court analyzed the cases as
McDonnell Douglas indirect proof cases and
pattern or practice cases. The record was full of
objective evidence--far more than the plaintiffs’
own evaluations of their performances--
suggesting that not only were they doing their
jobs well, but (more importantly) that in the
comparative ratings that are required in a RIF,
they could have survived had the criteria been
age-neutral. The size of the merit bonuses and
raises the companies paid them is one example of
such evidence, as is documentation of employees’
job skills, experience and past job performance.
Before turning to the ERISA claims, we add a
final word about the way this case has been
handled thus far. We have the greatest respect
for the conscientious way in which the district
court worked its way through the evidence, and we
have every confidence that it will continue to
manage this difficult case well on remand.
B. ERISA Claims
We can dispose of the ERISA claims in both
Adams and Allard with very little discussion,
because very little discussion is all they
received in the briefs on appeal. Indeed, the
briefs pay so little attention to this theory of
the case that we could rest our decision on the
ground that the plaintiffs have not preserved
these theories as a separate ground for relief
(as opposed to evidentiary support for their ADEA
claims). Even if we reach the merits, we agree
that summary judgment in the defendants’ favor
was proper on these claims. Briefly, both the
Adams and Allard plaintiffs had argued that they
were entitled to benefits under ERISA sec.sec.
502 and 503. 29 U.S.C. sec.sec. 1132, 1133. The
district court rejected these claims on the
ground that the plaintiffs who had originally
raised them failed to exhaust their remedies
under the Plan, and the one Allard plaintiff
(Meyers) who did exhaust failed to include this
as a ground of relief until it was too late. The
standard of review for a dismissal for failure to
exhaust Plan remedies is abuse of discretion.
Gallegos v. Mount Sinai Med. Ctr., 210 F.3d 803,
808 (7th Cir. 2000); Janowski v. International
Bhd. of Teamsters Local 710 Pension Fund, 673
F.2d 931, 935 (7th Cir. 1982). We see none here,
either in the decision concerning exhaustion or
in the decision to deny permission to Meyers to
amend the pretrial contentions to add this point
long after the time for putting claims on the
table had expired.
Both sets of plaintiffs also presented claims
under ERISA sec. 510, which prohibits an employer
from discriminating against an employee "for the
purpose of interfering with the attainment of any
right to which such participant might be entitled
under the plan." (Only the Adams plaintiffs raise
this issue on appeal, however.) One might think
from the earlier discussion that they were
pursuing a broad version of this theory, but that
is not the case. Instead, the Adams plaintiffs
sec. 510 claim alleges that the defendants
terminated them in November 1992 in order to
prevent them from learning what the January 1993
PBGC rate would be in time to make an election.
The district court initially denied the
defendants’ motion for summary judgment on these
claims, finding that the plaintiffs had presented
enough evidence to show that the CRESP evaluation
process may have been tailored to disfavor older
workers. The court later reversed itself after it
reconsidered ASI’s argument that one should not
equate pension eligibility and age and that
knowledge of a potentially adverse effect was not
the same thing as intent. Both those propositions
are true, but we are not certain either one has
great applicability here. On the other hand,
plaintiffs have pointed to no evidence in this
record that would support a finding that the
timing of the terminations was designed to
manipulate the discount rate. For that reason, we
also affirm summary judgment for ASI on this
theory.
C. Waivers and OWBPA
ASI and Indiana Bell have attacked the district
court’s ruling in the plaintiffs’ favor that the
waivers many of them signed were invalid under
the OWBPA. This point is relevant to the ADEA
claims (because if the waivers were valid, the
ADEA claims are barred), and so we must address
it. The Act states that "an individual may not
waive any right or claim . . . unless the waiver
is knowing and voluntary." 29 U.S.C. sec. 626(f).
In addition, if the waiver is sought in
connection with an early retirement program, it
must meet the following additional requirements:
(H) if a waiver is requested in connection with
an exit incentive or other employment termination
program offered to a group or class of employees,
the employer . . . informs the individual in
writing in a manner calculated to be understood
by the average individual eligible to
participate, as to--
(i) any class, unit, or group of individuals
covered by such program, any eligibility factors
for such program, and any time limits applicable
to such program; and
(ii) the job titles and ages of all individuals
eligible or selected for the program, and the
ages of all individuals in the same job
classification or organizational unit who are not
eligible or selected for the program.
29 U.S.C. sec. 626(f)(1)(H).
The waivers that the plaintiffs signed in this
case did not refer to the job titles of those
selected for the program; instead, they mentioned
only salary grade. As we noted above, in this
context the defendants have suddenly decided that
salary grade gives plenty of detail. We do not
need to decide here whether a literal job title
is always required. Indeed, as the Sixth Circuit
suggested in Raczak v. Ameritech Corp., 103 F.3d
1257 (6th Cir. 1997), cert. denied, 522 U.S. 1107
(1998), such a literal approach to the statute
could lead to hypertechnical requirements that
have little to do with the purpose of the law.
Id. at 1262-64. Here, however, the court found
that salary grade was too general to furnish the
kind of information the statute contemplated. As
a form of worker protection legislation, the
OWBPA demands information that allows people to
ascertain whether they are being treated fairly
vis-a-vis their peers. Congress’s use of the term
"job title" indicates that it wanted that
information to be quite specific (that is, more
literal and particular than the functional
approach for which the defendants are arguing,
which would have been adequate for a
statistician). On this record, we see no error in
the district court’s decision that the particular
waivers these plaintiffs signed failed to comply
with the Act.
We also affirm the district court’s decision
that the additional waivers signed by some
individuals who sought to join the Allard
litigation were valid. Charles Steinmetz and
Raymond Winkler sought permission to opt in as
plaintiffs in the Allard case. Magistrate Judge
V. Sue Shields denied them permission, and the
district court adopted the magistrate judge’s
ruling.
After Steinmetz, Winkler, and nine other
similarly-situated persons were terminated by
Indiana Bell, they employed an attorney (Mark
Waterfill, one of the attorneys in both the Adams
and the Allard litigation) and negotiated a
settlement. As part of this settlement, Indiana
Bell paid them both the standard enhanced
benefits package as well as an additional amount.
In exchange, these eleven signed both the
standard waiver and an additional waiver, or
"Settlement and General Release." Although the
district court had ruled that the standard
waivers signed by Steinmetz, Winkler, and the
other plaintiffs were invalid under the OWBPA,
the magistrate held that the additional waivers
signed as part of the negotiated settlement were
valid, even though the additional waiver, like
the standard one, failed to mention the job
titles of those who had been terminated. The
magistrate judge ruled that the additional
waivers were valid despite this deficiency
because those who signed the additional waivers
were in a substantially different position than
the other plaintiffs had been when they signed
the standard waiver: they had already been
terminated, and they were represented by an
attorney, who threatened litigation and
negotiated the settlement.
We agree with the magistrate judge (and the
district court, which adopted the magistrate’s
ruling) that the requirements of sec.
626(f)(1)(H) do not apply to the additional
waivers. Section 626(f)(1)(H) applies "if a
waiver is requested in connection with an exit
incentive or other employment termination program
. . . ." This language implies that the waivers
subject to the requirements of subsection (H)
must be requested while the early exit program is
being implemented. The additional waivers signed
by Steinmetz and Winkler were not signed in
connection with Indiana Bell’s early retirement
incentive program; instead, they were signed in
connection with post-termination settlement
negotiations. We therefore affirm the decision
not to allow Steinmetz and Winkler to opt-in as
plaintiffs in the Allard case.
D.Miscellaneous Issues
1. Janney Deposition
The Adams plaintiffs challenge the district
court’s decision not to allow them to depose
Richard Janney, a former ASI General Counsel and
Vice President. Janney authored a letter to the
editor published in the October 24, 1995, edition
of the Chicago Tribune in which he expressed his
opinion that stock options offered as part of
executive compensation are in large part
responsible for "continuing lay-offs and low pay
raises" for workers. Ameritech and its
subsidiaries were not mentioned in the letter.
Three weeks later, and five months after the
close of discovery, the Adams plaintiffs moved to
reopen discovery so that they could depose
Janney. The district court overruled the motion
on January 26, 1996.
Although the district court provided no reasons
for its decision, discovery is an area over which
the district courts have great authority and
discretion and we will not disturb the district
court’s resolution of a discovery dispute unless
we find that the court abused its discretion.
Corley v. Rosewood Care Ctr., Inc. of Peoria, 142
F.3d 1041, 1052 (7th Cir. 1998); Gile v. United
Airlines, Inc., 95 F.3d 492, 495 (7th Cir. 1996).
Given that Janney’s name and position were known
to the plaintiffs well in advance of his letter
and that their request to depose him was well
after the close of discovery, we find no such
abuse of discretion with respect to Janney.
2. Demotion Claims
Five of the Allard plaintiffs filed claims that
they had been "constructively demoted." Although
this is a strange label for a claim, what these
five plaintiffs allege at bottom is that they
were coerced into applying for and taking jobs
with lower pay, benefits, and status because they
were at risk of being terminated during the RIF;
and because the RIF violated the ADEA, they
allege, their decisions to take a demotion were
also infected with discrimination.
The district court granted summary judgment in
favor of Indiana Bell on these claims, reasoning
first that the plaintiffs had failed to produce
sufficient evidence to create a genuine issue of
material fact that illegal age discrimination
motivated the workforce resizing or any
individual termination, and second that the
plaintiffs’ decisions to apply for and accept
lower-paying craft positions were voluntary.
As both sides and the district court agree, the
critical precedent on this issue is Henn v.
National Geographic Society, 819 F.2d 824 (7th
Cir. 1987). In Henn, this court ruled that the
offer of an early retirement program could be
discriminatory and violate the ADEA if those who
took the early retirement offer did not have a
true choice in the matter:
[The plaintiffs] could prevail only by showing
that [their employer] manipulated the options so
that they were driven to early retirement not by
its attractions but by the terror of the
alternative. If the terms on which they would
have remained at [their employer] were themselves
violations of the ADEA, then taking the offer of
early retirement was making the best of things,
a form of minimization of damages. Suppose, for
example, that one of the plaintiffs expected to
earn $200,000 in his remaining time at [his
employer], but [it] (in violation of the ADEA)
had just cut his salary because of his age, so
that he now could expect no more than $100,000.
The employee would snap up an early retirement
package worth $110,000 but might reject the same
old package had he been allowed to work at his
old wage. . . . The decision to reduce one’s
injury from the employer’s violation of the ADEA
would not prevent a suit seeking to recover the
remainder of the loss.
Id. at 829. See also Karlen v. City Colleges of
Chicago, 837 F.2d 314, 317 (7th Cir. 1988)
("Whether a worker takes early retirement because
he fears he will be discriminated against on
account of his age if he does not, or refuses to
take early retirement and indeed is then
discriminated against on account of his age, his
rights under the Age Discrimination in Employment
Act have been violated.").
The Henn dilemma describes what the constructive
demotion plaintiffs faced to a "T." Their
decisions to accept demotions to lower paying and
lower status jobs were taken in the face of this
possibly discriminatory action. These plaintiffs
were not faced with a truly voluntary choice:
because they were already on the "at risk" lists,
they knew that they sat between the Scylla of a
better job but with low security, and the
Charybdis of a lesser job but with high security.
If the plaintiffs succeed in demonstrating that
the RIF was infected with and motivated by age
discrimination, then they should be allowed to
proceed with their claim that their decisions to
accept demotions were the result of the same
discrimination.
IV
The parties have raised a number of additional
points in their briefs. We note here only the
fact that our decision with respect to the
plaintiffs’ right to go forward on their
discrimination cases covers both the pattern or
practice theory and the individual cases. We
Reverse the claims in both Adams and Allard that
arise under the ADEA and Remand for further
proceedings. We Affirm the district court’s
dismissal of all claims based on ERISA. Each
party shall bear its own costs on appeal.
/1 At Indiana Bell, workers with fewer than five
years of service were excluded from the Stage 1
mechanical ranking process because the company
did not have reliable performance data for them.
Instead, higher level department managers
reviewed the work of the newer employees and
indicated whether any particular person should be
evaluated for possible termination.