CRAIG SHRADER VS. DATAMOTION, INC. (L-2562-15, MORRIS COUNTY AND STATEWIDE) ( 2019 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-2730-17T4
CRAIG SHRADER,
Plaintiff-Appellant,
v.
DATAMOTION, INC., and
ROBERT JANACEK,
Defendant-Respondents.
____________________________
Submitted February 11, 2019 – Decided June 10, 2019
Before Judges Sumners and Mitterhoff.
On appeal from Superior Court of New Jersey, Law
Division, Morris County, Docket No. L-2562-15.
Law Office of David H. Kaplan, LLC, attorneys for
appellant (David H. Kaplan, of counsel; Jeffrey Zajac,
on the brief).
Fisher & Phillips LLP, attorneys for respondent (David
B. Lichtenberg, of counsel; David J. Treibman, on the
brief).
PER CURIAM
Plaintiff Craig Shrader appeals from the trial court's order granting
summary judgment in favor of defendants DataMotion Inc. ("DataMotion") and
Robert Janacek (collectively "defendants") in an age discrimination claim
brought pursuant to the New Jersey Law Against Discrimination, N.J.S.A. 10:5-
1 to -42 ("LAD"). In May 2015, plaintiff's position at DataMotion was
eliminated as part of a reduction-in-force ("RIF"). However, plaintiff contends
that the RIF was a pretext for discrimination and that he was actually fired due
to age bias. The trial court granted summary judgment to DataMotion. On
appeal, plaintiff argues there are several issues of material fact that would
support a jury finding DataMotion's claim that the decision to fire him was a
legitimate part of a RIF was, in fact, a pretext for discrimination on the basis of
age. In light of the competent evidence in the record, and the prevailing legal
principles, we affirm.
We derive the following facts from the record. DataMotion is a privately
held corporation, which was founded by Mahesh Muchhala and defendant
Janacek in 1999. DataMotion is in the business of moving sensitive data
securely between trading partners using encryption software. Muchhala is the
President of the company and during the relevant time, Janacek was Chief
Technology Officer ("CTO"). From 2008 through 2013, Robert Bales was a
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shareholder and a member of the company's Board of Directors. In or about late
2012 or early 2013, Bales also became CEO.
In December 2012, Muchhala, Bales, and Janacek decided to "staff ahead
of cash flow," expanding the company by hiring more employees in order to
enter the electronic medical records market. As a result, during 2013,
DataMotion's workforce expanded from approximately twelve employees to
about thirty-five.
Among those hired in the expansion was plaintiff, who on August 12,
2013, began his employment with DataMotion as Vice President of Technical
Operations and Support, reporting to Janacek. Plaintiff, who was born February
23, 1953, was sixty years old when Janacek hired him. 1 Janacek decided to
create plaintiff's position to facilitate the company’s attempt to obtain more
"enterprise customers" (i.e. large companies whose employees number in the
thousands and that have formal structures).
Janacek interviewed and hired plaintiff because he had the skill set
Janacek was looking for: significant enterprise, security, and compliance
experience, and the capability of overseeing support and operations. Prior to
1
Janacek was forty-eight years old when he hired plaintiff.
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hiring plaintiff, Janacek had performed those functions, except for compliance,
which had been handled by technical writer John Irwin.
Plaintiff oversaw DataMotion's support and operations department.
Plaintiff's role was to support enterprise customers. He did not make the sales,
but could be involved in supporting the sales team. Plaintiff's job was not
technical, rather he had oversight of a team that included technical experts like
Matthew Signorello.
Signorello, an employee in his thirties, began working for DataMotion in
April 2013, several months before plaintiff did. He took the "natural lead" of
both the operations and support aspects of plaintiff's department, having day-to-
day responsibility for both operations oversight and customer support. Plaintiff
noted that Signorello "gave his heart and soul for the company making
customers [and] addressing customer problems" in a timely and effective
fashion.
Signorello was "an architect engineer of the" software on which
DataMotion's business was based. He oversaw the hardware and software
installations for both DataMotion and its customers and worked with around
seventy electronic health record companies, which constituted a "big part" of
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DataMotion's growth. Signorello also functioned as a "presales system
engineer," providing technical support to salespeople.
DataMotion operated at a deficit beginning in 2008. At that time,
Muchhala, Bales, and Janacek decided they wanted to "grow the company" with
the ultimate goal of selling it, and financed its growth with funds from outside
investors. They expected the company to operate at a deficit for about three
years, at which point revenues would exceed expenses; but by the end of 201 2
that had not happened.
DataMotion's "staffing ahead" started in 2013 and continued throughout
plaintiff's employment. As a result of the financial situation, within two months
after plaintiff began working for DataMotion, the company imposed a salary
reduction, with plaintiff's starting salary of $150,000 being reduced twenty
percent. However, within a few weeks, plaintiff's full salary was restored, and
he was fully reimbursed for the short-lived reduction.
In the middle of 2014, the company announced there would be a shortfall
in revenue, and that the salaries of employees at the Vice Presidential level and
above, including plaintiff and seven others, would be reduced. Plaintiff's salary
was again cut twenty percent, and this reduction lasted about three or four
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months. When salaries were restored, the company was unable to offer a
reimbursement.
The company's financial troubles continued into 2015. The management
team, Muchhala, Bales, and Janacek, were considering all options for reducing
expenses. Early in the year they implemented a hiring freeze, then another round
of twenty percent salary reductions, which affected "the entire executive team
and the sales team," including, among others, Muchhala, Bales, and Janacek, as
well as plaintiff. Bales and Janacek instructed plaintiff to "reduce expenses in
any way possible." In short, DataMotion "did just about everything we could to
reduce cost[s] short of letting people go," but "[w]e finally got to a point where
it was clear we needed to trim staff," and ultimately decided that a "downsizing"
was necessary.
Muchhala, Bales, and Janacek decided that DataMotion needed to reduce
payroll by approximately $400,000 while still maintaining current operations.
Janacek, who had hired plaintiff, made the decision to include plaintiff's position
in the RIF upon being "asked by Mr. Bales to look at the department and see
how we can still run effectively and save cost."
Plaintiff's position was chosen for the downsizing for several reasons:
First, plaintiff's position had been created primarily to facilitate DataMotion's
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attempt to obtain and service enterprise customers. However, the anticipated
"enterprise sales didn't materialize." Plaintiff admitted that "we looked at a
professional services capability that would generate revenues, and unfortunately
the results of those efforts were not significant and did not come in a time that
would make a difference for the reduction in force."
Second, before Janacek hired plaintiff, he had handled enterprise
customers, security, and the oversight of support and operations, and Irwin had
handled compliance. Thus, the two of them could reabsorb the functions of
plaintiff's position.
Third, plaintiff, unlike the other three Vice Presidents, did not do any
hands-on work. He "was the only one that was doing primarily management
functions as opposed to doing management plus part of the job, so we felt like
we could replace him with existing people."
Plaintiff acknowledges the reasoning in choosing his position for the
downsizing, testifying: "I believe there were two things at play. One is that I
was a highly paid senior person, and I believe they no longer needed my value -
added experience and background, and they felt that they could operate their
company with less qualified individuals."
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By mid-April 2015, Muchhala, Bales, and Janacek had decided that four
employees would be terminated in the downsizing: plaintiff; two salespeople,
Ali Kizar, aged forty-nine, and Tracy Huff, aged forty-seven; and a quality
assurance employee, Gregory Zuvich, aged forty-five.
DataMotion's downsizing accomplished its objective of reducing payroll
by $400,000 per year. Based on their year-to-date earnings as of May 31, 2015, 2
plaintiff's salary was $136,400.04 per year, Kizar’s was $88,247.88 per year,
Huff’s was $81,733.80 per year, and Zuvich’s was $90,000 per year, for a total
of $396,381.72.
After plaintiff's termination, he was not replaced. Instead, his
responsibilities were primarily reabsorbed by Janacek and Irwin, with the
balance being distributed to other DataMotion employees in plaintiff's
department, including systems engineers Jeremy Kessous and Tom O'Reilly, and
operations and support employee Signorello.
On October 26, 2015, plaintiff filed his complaint against defendants.
After defendants filed a motion for summary judgment, the trial court heard oral
argument and granted the motion.
2
The effective date of the terminations of all except Zuvich was May 31, 2015.
Zuvich's last official day was May 29, 2015.
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The trial court's decision rested on the finding that plaintiff was unable to
state a prima facie claim of age discrimination under the LAD. The trial court
noted that nothing in the record supported plaintiff's contentions that the
decision to eliminate his position had anything to do with age. The trial court
further noted that plaintiff's opposition was based primarily on his own
deposition testimony and his counsel's certifications. The trial court further
found that even if plaintiff could establish a prima facie case, DataMotion
provided numerous legitimate, non-discriminatory reasons for the elimination
of plaintiff's position, which plaintiff failed to rebut.
On appeal, plaintiff argues that the trial court erred by granting
DataMotion's motion for summary judgment because he established a prima
facie case of age discrimination. Although we agree that plaintiff established a
prima facie claim of age discrimination, on summary judgment, he was unable
to rebut DataMotion's legitimate, non-discriminatory business reasons for
eliminating his position. Accordingly, we affirm the trial court's grant of
summary judgment to DataMotion.
We review a grant of summary judgment de novo. Conley v. Guerrero,
228 N.J. 339, 346 (2017) (citing Templo Fuente De Vida Corp. v. Nat'l Union
Fire Ins. Co. of Pittsburgh, 224 N.J. 189, 199 (2016)).
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[W]hen deciding a motion for summary judgment under
Rule 4:46–2, the determination whether there exists a
genuine issue with respect to a material fact challenged
requires the motion judge to consider whether the
competent evidential materials presented, when viewed
in the light most favorable to the non-moving party in
consideration of the applicable evidentiary standard,
are sufficient to permit a rational factfinder to resolve
the alleged disputed issue in favor of the non-moving
party.
[Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520,
523 (1995).]
"[S]ummary judgment will be granted if there is no genuine issue of material
fact and 'the moving party is entitled to a judgment or order as a matter of law.'"
Conley, 228 N.J. at 346 (citing Templo Fuente, 224 N.J. at 199). We emphasize
that "conclusory and self-serving assertions by one of the parties are insufficient
to overcome [a summary judgment] motion[.]" Puder v. Buechel, 183 N.J. 428,
440-41 (2005) (citing Martin v. Rutgers Cas. Ins. Co., 346 N.J. Super. 320, 323
(App. Div. 2002)).
According to the LAD,
It shall be an unlawful employment practice, or, as the
case may be, an unlawful discrimination . . . [f]or an
employer, because of the . . . age . . . of any individual
. . . to discharge . . . or to discriminate against such
individual in compensation or in terms, conditions or
privileges of employment[.]
[N.J.S.A. 10:5-12(a).]
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All workers over the age of eighteen are protected from age discrimination under
the LAD. Bergen Com. Bank v. Sisler, 157 N.J. 188, 214-15 (1999).
Prima Facie Case of Age Discrimination.
"In a case alleging age discrimination under the LAD, an employee must
'show that the prohibited consideration[, age,] played a role in the decision
making process and that it had a determinative influence on the outcome of that
process.'" Id. at 207 (alteration in original) (quoting Maiorino v. Schering-
Plough Corp., 302 N.J. Super. 323, 344 (App. Div. 1997)). New Jersey courts
utilize the framework established in McDonnell Douglas Corp. v. Green, 411
U.S. 792 (1973) when a plaintiff attempts to "prove an employer's
discriminatory intent through circumstantial evidence." Id. at 209. "[T]o
successfully assert a prima facie claim of age discrimination under the LAD,
plaintiff must show that: (1) she was a member of a protected group; (2) her job
performance met the 'employer's legitimate expectations;' (3) she was
terminated; and (4) the employer replaced, or sought to replace, her." Nini v.
Mercer Cty. Comm. C., 406 N.J. Super. 547, 554 (App. Div. 2009), aff'd 202
N.J. 98 (2010) (quoting Zive v. Stanley Roberts, Inc., 182 N.J. 436, 450 (2005)).
In RIF cases, such as the instant one, the prima facie elements are
modified. See Baker v. Nat'l State Bank, 312 N.J. Super. 268, 289 (App. Div.
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1998). In Baker, the Appellate Division adopted the reasoning of Marzano v.
Comput. Sci. Corp., Inc., 91 F.3d 497 (3d Cir. 1996) for age discrimination
claims under the LAD. Ibid.[In Marzano], the court noted that the Third Circuit
Court of Appeals has relaxed the fourth prong of the
prima facie case in the RIF situation, so that a plaintiff
whose position was eliminated need not show that he or
she was replaced, but must show that the employer
retained someone outside the protected class. The court
declined to impose the requirement of additional
evidence because "[i]t would topple the complex
evidentiary edifice constructed by the Supreme Court,
and impose on plaintiff the very burden that McDonnell
Douglas sought to avoid-that of uncovering a smoking
gun," or producing direct evidence of discrimination.
[Id. at 289-90 (citations omitted).]
Unlike the trial court, we find that plaintiff has stated a prima facie case
of age discrimination. See Nini, 406 N.J. Super. at 554. It is undisputed that
plaintiff was a member of the protected class as he was sixty-two when his
position was eliminated. See ibid. It is also undisputed that plaintiff performed
his job adequately and was discharged from his employment. See ibid. Further,
plaintiff's job duties were split among the remaining employees in his former
department, including Signorello, who was outside the protected class, and the
Vice Presidents. See Baker, 312 N.J. Super. at 289-90. Accordingly, pursuant
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to Marzano, plaintiff met his burden of establishing a prima facie case of age
discrimination. See ibid.
However, this finding does not end our inquiry.
Legitimate Business Reason for Eliminating Plaintiff's Position.
"Once an employee establishes a prima facie case, the employer must
'articulate some legitimate, non-discriminatory reason for the employee's
rejection.'" Erickson v. Marsh & McLennan Co., 117 N.J. 539, 550 (1990);
Sisler, 157 N.J. at 210-11. "Where the employer produces such evidence, the
presumption of discrimination disappears." Sisler, 157 N.J. at 211 (citing St.
Mary's Honor Ctr. v. Hicks, 509 U.S. 502, 507-08 (1993)).
Here, DataMotion established several legitimate, non-discriminatory
business reasons for eliminating plaintiff's position. See Erickson, 117 N.J. at
550. When DataMotion was unsuccessful in utilizing hiring freezes and salary
reductions to increase profit, it decided to eliminate several positions that would
not require hiring or training new employees.
Plaintiff's position was selected for several legitimate business reasons.
First, he did not deal with day-to-day operations of the company, unlike the other
Vice Presidents. Thus, plaintiff's job responsibilities were such that they could
be absorbed by other Vice Presidents or employees. In that regard, most of his
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job responsibilities were reabsorbed by Janacek and Irwin, who performed the
job prior to plaintiff's hire. In addition, plaintiff was hired because DataMotion
wanted to gain new enterprise clients, but the attempt to gain to new clients was
unsuccessful.
The record reveals that plaintiff denied several of DataMotion's stated
reasons for eliminating his position. However, plaintiff offers no evidence to
support his denials, and plaintiff's own deposition testimony confirms
DataMotion's motivations. Moreover, plaintiff acknowledged that there were
legitimate business reasons for eliminating his position, including that
DataMotion "no longer needed [his] value-added experience and background."
As "conclusory and self-serving assertions by one of the parties are insufficient
to overcome [a summary judgment] motion," plaintiff's bald denials are not
enough to rebut DataMotion's legitimate business reasons for eliminating his
position. See Puder, 183 N.J. at 440.
Furthermore, plaintiff's contentions that Signorello was retained instead
of him because of plaintiff's age are without merit. Signorello was heavily
involved in DataMotion's day-to-day operations and was a large part of
DataMotion's growth. While plaintiff primarily possessed management skills,
and did not have hands-on day-to-day responsibilities, Signorello was a
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"natural" leader within plaintiff's department. Plaintiff also concedes that
Signorello "gave his heart and soul for the company."
Thus, as plaintiff did not meet his burden in refuting defendants' stated
non-discriminatory, legitimate business reasons for eliminating his position, we
conclude that the trial court correctly granted summary judgment to defendants.
See Sisler, 157 N.J. at 210-11.
To the extent any arguments are not addressed herein, they are without
sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).
Affirmed.
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