Edward LaBonte, Respondent, vs. TEAM Industries, Inc., et al., Appellants.

Edward LaBonte, Respondent, vs. TEAM Industries, Inc., et al., Appellants. A06-1593, Court of Appeals Unpublished, July 24, 2007.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2006).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A06-1593

 

Edward LaBonte,

Respondent,

 

vs.

 

TEAM Industries, Inc., et al.,

Appellants.

 

Filed July 24, 2007

Affirmed

Kalitowski, Judge

 

Hubbard County District Court

File No. C1-04-238

 

Stephen W. Cooper, Stacey R. Everson, The Cooper Law Firm, Chartered, Loring Green East, 1201 Yale Place, Suite A100, Minneapolis, MN 55403 (for respondent)

 

Alec J. Beck, Sara G. Sidwell, Seaton, Beck & Peters, P.A., 7300 Metro Boulevard, Suite 500, Minneapolis, MN 55439 (for appellants)

 

            Considered and decided by Minge, Presiding Judge; Toussaint, Chief Judge; and Kalitowski, Judge.

U N P U B L I S H E D   O P I N I O N

KALITOWSKI, Judge

            Appellant TEAM Industries, Inc. and its subsidiaries challenge the district court's conclusions that:  (1) appellants discriminated against respondent Edward LaBonte on the basis of age under both disparate impact and disparate treatment theories; (2) respondent was entitled to back and front pay; and (3) respondent was entitled to attorney fees.  We affirm. 

D E C I S I O N

            Appellant TEAM Industries, Inc. and its subsidiary TEAM Industries Park Rapids-DL, Inc. executed a reduction-in-force on April 7, 2003, reducing the employment level at the Park Rapids facility from 230 to 198 workers.  Respondent Edward LaBonte, then 60 years of age, was one of the 32 employees discharged.   

            To aid its decision as to which employees to discharge, appellant created and relied on a forced-ranking tool.  Supervisory employees ranked each employee against every other employee based on four factors:  performance level, criticality of position, length of service, and promotability.  The result was a list of employees from most to least valuable to the facility. 

            The lowest-ranked 25% of employees were considered for discharge.  Three adjustments were made to the list to avoid discharging a husband and wife pair, to account for skills not previously considered, and to negate subjective use of the tool against an employee with whom one supervisor-rater had suspected personal animus.  Although respondent's position on the list varied, he was on the "25% list" and his employment was terminated.  

            Evidence was introduced at trial regarding a statistical analysis of those employees who were discharged based on use of the tool.  The evidence indicated that the employment terminations had an adverse impact on workers over the age of 40 and that the impact increased with increasing age.  Nearly 11% of workers older than 40 years of age were discharged, 33.33% of workers older than 50 years of age were discharged, and 62.5% of workers older than 60 years of age were discharged.  Evidence at trial indicated that this is statistically significantly different than the expected lay-off population had age not been a factor in selecting workers to discharge.

            Respondent brought suit against appellant alleging various employment-termination-related claims including age discrimination.  The district court concluded that appellant had discriminated against respondent under both disparate treatment and disparate impact theories, awarded respondent both back and front pay, awarded respondent attorney fees, and denied appellant's motion for a new trial.

I.

            The Minnesota Human Rights Act (MHRA) prohibits "an employer, except when based on a bona fide occupational qualification, to discriminate as to terms and conditions of employment on the basis of age."  Hamblin v. Alliant Techsystems, Inc., 636 N.W.2d 150, 152 (Minn. App. 2001), review denied (Minn. Feb. 19, 2002); see also Minn. Stat. § 363 A. 08, subd. 2 (2006).

            Age discrimination claims under the MHRA, Minn. Stat. §§ 363A.01-.41 (2006), can be proven by either disparate treatment or disparate impact.  See generally Hamblin, 636 N.W.2d 150.  Appellant argues that the district court abused its discretion by concluding that respondent proved both theories.  We disagree.

            1.         Disparate Treatment

            An MHRA-based disparate-treatment claim may be proven through direct or indirect evidence.  Diez v. Minn. Mining & Mfg., 564 N.W.2d 575, 579-80 (1997).  Here, the district court found no direct evidence.  "When there is no direct evidence of discrimination, [Minnesota courts] analyze age discrimination claims using the burden shifting analysis of McDonnell Douglas."  Hamblin, 636 N.W.2d at 152-53. 

            The Minnesota Supreme Court explained the McDonnell-Douglas burden-shifting analysis:

To successfully proceed under the MHRA, (1) the plaintiff must establish a prima facie case of discrimination; (2) the burden then shifts to the employer to articulate a nondiscriminatory reason for its action; and (3) the plaintiff must then prove by a preponderance of the evidence that the reason is merely a pretext for discrimination.

 

Id. at 153. 

            Prima Facie Case

            "The requirements for establishing a prima facie case . . . vary depending on the circumstances involved."  Id.  And "establishing a prima facie case . . . is not onerous."  Dietrich v. Canadian Pac. Ltd., 536 N.W.2d 319, 323 (Minn. 1995). 

            In bona fide reduction-in-force cases, the elements of a prima facie showing are:  "(1) that plaintiff is a member of a protected group; (2) that plaintiff sought and was qualified for opportunities that the employer made available to others; (3) that plaintiff, despite [her] qualifications, was denied those opportunities"; and (4) plaintiff provides "additional evidence that age was a factor in termination."  Diez, 564 N.W.2d at 580.  The fourth element "may take many forms" and is not intended to be "overly rigid."  Dietrich, 536 N.W.2d at 324. 

            Circumstantial and statistical evidence can establish a prima facie case.  See Hamblin, 636 N.W.2d at 153.  "[T]he factually-oriented, case-by-case nature of [age discrimination] claims requires that we not be overly rigid in our consideration of the evidence of discrimination a plaintiff may offer."  Dietrich, 536 N.W.2d at 324 (citing Holley v. Sanyo Mfg., 771 F.2d 1161, 1165-66 (8th Cir. 1985)). 

            The district court concluded that respondent had made the required prima facie showing:  respondent, age 60 at the time of the layoffs, fell within a protected class of people under the MHRA, was qualified for the job from which he was terminated, was discharged due to a reduction in force, and presented additional evidence that age was a factor in the discharge decisions.  

            Appellant argues that the district court abused its discretion by concluding that respondent met the second prima facie criteria because respondent was not qualified for the job he had held for the past five years.  We disagree.  Appellant acknowledged that respondent's employment was not terminated because he was unqualified, but because he ranked lower than other employees on the forced-ranking evaluation tool.  Appellant argues that even if respondent was qualified, he was not more qualified than other employees.  But being more qualified is not the requirement of the prima facie showing.  See Diez, 564 N.W.2d at 580.  We conclude that the district court did not abuse its discretion by concluding that respondent was qualified for the job he held with appellant. 

            Appellant argues that the district court abused its discretion by concluding that respondent satisfied the "additional evidence" requirement of the fourth prima facie prong.  As "additional evidence" the district court credited circumstantial and statistical evidence:

The Plaintiff has shown a statistical analysis by his expert witness that concluded that three of the criteria were subjective, age was negatively correlated with the scores for employees on the forced ranking, and that his standard deviation analysis showed age was a factor in the terminations.  Additionally, the Defendant's expert witness, Dr. Coumbe, testified that the forced ranking tool should not be 100% of the basis for an employee's termination and acknowledged that the criteria of "promotability" should not be used in a termination situation.

 

Appellant's argument does not refute any of the district court's findings, but rather describes how carefully the tool was developed and implemented.  Appellant has failed to show any error in the district court's finding of fact.  See State v. Modern Recycling, Inc., 558 N.W.2d 770, 772 (Minn. App. 1997) (holding assignment of error in brief based on "mere assertion" and not supported by argument or authority is waived unless prejudicial error is obvious on mere inspection). 

            Nondiscriminatory Reason

            Because respondent successfully presented a prima facie showing of discrimination, the burden of production in the district court case shifts to appellant to provide a legitimate, nondiscriminatory reason for the termination.  Hamblin, 636 N.W.2d at 153.  The district court held, and appellant does not dispute, that the reduction in force was a legitimate, nondiscriminatory reason for the termination.

            Pretext

            Because appellant successfully produced a legitimate, nondiscriminatory reason to terminate respondent's employment, the burden of production in the district court case returns to respondent to show that appellant's reason is pretext.  Id.  Appellant challenges the district court's conclusion that respondent proved pretext through statistical evidence and a showing that appellant relied on the forced-ranking tool's results inconsistently and subjectively.

            Appellant cites the First Circuit as saying that "statistical evidence in a disparate treatment case, in and of itself, rarely suffices to rebut an employer's legitimate, nondiscriminatory rationale for its decision to dismiss an individual employee."  LeBlanc v. Great Am. Ins. Co., 6 F.3d 836, 848 (1st Cir. 1993).  But "[c]ourts have held that statistical evidence regarding employees in the department where a terminated plaintiff formerly worked may support a finding of pretext."  Hamblin, 636 N.W.2d at 153.  And "a lack of uniformity in applying ranking criteria is fact evidence as to pretext."  Id. at 154-55.

            In Hamblin, the court considered whether a combination of statistical analysis, ageist comments, and lack of uniformity in application of the allegedly nondiscriminatory ranking criteria provided sufficient evidence of pretext.  Id. at 153.  The court held that

            The combination of statistical evidence, evidence of discriminatory corporate culture, and lack of uniformity in [the employer's] ranking process, along with [the employee's] sharp drop in ranking, is evidence sufficient to raise an issue of fact as to pretext when the evidence is viewed in the light most favorable to [the employee].

 

Id.  Here, statistical evidence indicates that the forced-ranking tool upon which appellant relied produced disparate results depending on the age of the person to whom it was applied.  And the record indicates that appellant manipulated rankings of three employees on the list, resulting in lower rankings for the remaining employees.  One employee was re-rated because of a suspected personality conflict with the rating supervisor and rose in ranking afterwards, indicating that the tool was subjectively used.  We conclude that the district court did not abuse its discretion by concluding that the statistical data and evidence regarding the inconsistent and subjective manner in which the ranking tool was applied satisfied respondent's showing of pretext. 

            Accordingly, we conclude that the district court did not abuse its discretion by concluding that appellant subjected respondent to disparate treatment on the basis of age under the MHRA.

            2.         Disparate Impact

            "Disparate impact claims are expressly recognized under the Minnesota Human Rights Act."  Id. at 155. 

To establish a prima facie case, the plaintiff must prove that an employment practice is responsible for a statistically significant adverse impact on a particular class of persons protected by [the MHRA].  Once this burden is met, an employer must justify that practice by demonstrating that the practice is manifestly related to the job or significantly furthers an important business purpose.  If the practice is justified, the plaintiff must demonstrate the existence of a comparably effective practice that the court finds would cause a significantly lesser adverse impact on the identified protected class.

 

Id. (citations and quotations omitted).

            Prima Facie Case

            To make a prima facie showing of disparate impact, respondent was required to show that a particular employment practice adversely affected a group of people protected by the MHRA.  Id.  Appellant argues that the district court abused its discretion by concluding that respondent made such showing.  Appellant TEAM Industries Park Rapids-DL, Inc. operates two facilities and both underwent reductions in force at the same time.  Appellant argues that if the statistics for both facilities are combined, they do not show that older workers were adversely impacted by the layoffs. 

            Although both facilities are owned by the same TEAM subsidiary and share some management personnel, the rankings were performed at each plant by supervisors at that plant.  Respondent was grouped with and compared to other employees at the Park Rapids facility alone, not with employees from both facilities.  And we have cited the United States Supreme Court's rejection of such a "bottom-line" analysis with approval in Novack v. Northwest Airlines, Inc., 525 N.W.2d 592, 599 (Minn. App. 1995).  In rejecting the "bottom-line" analysis, the Court held that an employer "may not defend the alleged discriminatory practice on the basis that the members of the protected class are adequately represented at the employer's ‘bottom-line.'"  Id. (citing Connecticut v. Teal, 457 U.S. 440, 441-42, 102 S. Ct. 2525, 2528 (1982)).  Appellant's "bottom-line" argument is similarly unpersuasive.  We conclude that the decision to consider only the Park Rapids data is not an abuse of the district court's broad discretion. 

            Because we conclude that the district court did not abuse its discretion by considering only the Park Rapids data and that data showed disparate treatment was afforded protected workers, we conclude that the district court did not abuse its discretion by concluding that respondent made a prima facie showing of disparate impact discrimination.

            Appellant also argues that the small sample size of those employees losing their jobs leads to faulty statistical analysis.  While this is true regarding samples, the statistics analyzed here represent the entire population of employees at the facility and not merely a sampling of that population.  Therefore, the results of the analysis are not only representative of the population, but are accurate descriptions of the population.              Business Purpose

            Because respondent made a prima facie showing of disparate impact discrimination, the burden of production at trial shifted to appellant to show that the employment practice, namely the use of the forced-ranking tool, "is manifestly related to the job or significantly furthers an important business purpose."  Hamblin, 636 N.W.2d at 155. 

            Appellant argues that if the selection tool "directly measures a skill needed for the job," appellant may avoid liability even if the selection tool has a disparate impact on a protected class.  The district court concluded that, although the subjective forced-ranking tool furthered the legitimate goals of the employer, it did not significantly further the goals.  The district court concluded that "[t]he tool was of questionable validity and utility with all of its exceptions, inconsistencies, and discriminatory effect." 

            Although appellant correctly cites Novack as stating that the employer need not prove that the selection criteria is "absolutely, manifestly related to the job," it fails to include the very next sentence which states that "to be justified as a business necessity, a practice must directly relate to a[n] . . . employee's ability to perform the job effectively."  Novack, 525 N.W.2d at 598 (quotation omitted).  Evidence at trial indicated that the forced-ranking tool here is not directly related to an employee's ability to perform the job effectively.  According to performance reviews, respondent was performing the job effectively at the time his employment was terminated.  Instead, there is evidence in the record that the tool was applied subjectively and inconsistently, returning different results based on the person performing the rating, and was susceptible to adjustments to correct for disfavored outcomes.  Although appellant relied on the tool while making necessary layoff decisions, we conclude that the district court did not abuse its discretion by concluding that the tool is neither a business necessity nor manifestly job-related.

            Alternative Practice

            Because the district court correctly decided that appellant had not carried its burden of production to show that the forced-ranking tool was either a business necessity or manifestly job-related, respondent did not need to demonstrate "the existence of a comparably effective practice that . . . would cause a significantly lesser adverse impact on the identified protected class."  See Hamblin, 636 N.W.2d at 155. 

            Accordingly, we conclude that the district court did not abuse its discretion by determining that appellant had discriminated against respondent on the basis of age under a disparate impact theory.

II.

            Front and back pay are actual damages compensable under the MHRA.  Minn. Stat. § 363 A. 29, subd. 5(1); Ray v. Miller Meester Advertising, Inc., 684 N.W.2d 404, 407 (Minn. 2004).  "The potentially speculative nature of front pay awards is limited by the plaintiff's duty to mitigate damages."  Ray, 684 N.W.2d at 406. 

            Appellant argues that the district court clearly erred by finding that respondent mitigated his damages prior to trial because respondent failed to accept appellant's offer to reapply for a job with appellant.  "Generally, in a wrongful discharge case, if the employer offers in good faith to reemploy the discharged employee in the same or similar capacity at the same salary, the employee's failure to accept the offer mitigates the damages for which the employer is liable."  Feges v. Perkins Restaurants, Inc., 483 N.W.2d 701, 709 (Minn. 1992).  "However, the employee is not required to accept the position if doing so would be offensive or degrading."  Id.

            We conclude that the district court did not clearly err by finding that respondent had not failed to mitigate damages by not applying for positions with appellant.  The record indicates that (1) appellant did not offer respondent a job, only an opportunity to apply for a job; (2) appellant did not provide specific information regarding which positions were available; and (3) appellant did not offer positions in respondent's area of expertise. 

            Appellant argues that the district court clearly erred by finding that respondent used reasonable diligence in securing substitute employment.  Appellant cites cases in which displaced employees sent out approximately 1,000 resumes to support its argument that respondent, who applied for only 10-12 jobs in 19 months, did not conduct a reasonable job search.  But respondent was 60 years old, had limited skills, and lived in Park Rapids.  Respondent eventually accepted employment with Home Depot.  Although appellant argues that respondent should have secured new employment within two months, the district court is in the best position to evaluate the local job opportunities for a person in respondent's situation.  We conclude that the district court did not clearly err.

            Appellant argues that the district court abused its discretion in calculating respondent's damages because respondent did not accept an eventual offer to apply for full-time employment at Home Depot, but instead remained a part-time employee there.  Appellant argues that full-time employment wages should be imputed to respondent and the award of damages accordingly reduced.  Respondent testified that he had begun working part-time at Home Depot seven months before the trial began and was asked to apply for full-time employment only three months before the trial began.  He testified that with the trial date approaching, bringing unknown demands on his time, and because part-time employees enjoyed more scheduling freedom than full-time employees, he chose to remain a part-time employee rather than apply for a full-time position.  When asked whether full-time work remained available, respondent answered that he did not know; Home Depot maintained a certain level of full-time employees and he did not know whether that quota was full.  However, he testified that summer was the busiest time of year for Home Depot and working hours were typically reduced in the off-season.  The trial was held for five days in June, five days in July, and two days in August.  Other than eliciting brief testimony from its expert that respondent's failure to apply for a full-time position with Home Depot did not reflect behavior of a serious job-seeker, appellant did not provide testimony to support its argument that full-time income should be imputed to respondent.  On this record, we conclude that the district court did not abuse its discretion in calculating the back-pay award.

            Appellant argues that the district court abused its discretion by awarding respondent five years of front pay.  Appellant contends that five years after the trial, respondent would be 68 years old and that no evidence was presented to support the district court's decision that respondent would work that long.  But appellant does not provide more than speculation that respondent would retire before the age of 68.  See Modern Recycling, Inc., 558 N.W.2d at 772.  We conclude that the district court did not abuse its discretion by awarding five years of front pay.

III.

            The MHRA provides that reasonable attorney fees may be awarded to a prevailing party.  Minn. Stat. § 363 A. 33, subd. 7.  The district court's award of attorney fees and costs will not be disturbed absent an abuse of discretion.  Becker v. Alloy Hardfacing & Eng'g Co., 401 N.W.2d 655, 661 (Minn. 1987).  "The district court may determine which party, if any, qualifies as a prevailing party when considering a request for costs incurred."  Benigni v. County of St. Louis, 585 N.W.2d 51, 54-55 (Minn. 1998) (citing In re Gershcow's Will, 261 N.W.2d 355, 340 (Minn. 1977)).  Here, the district court determined that respondent was the prevailing party; it determined that appellant had discriminated against respondent and awarded respondent $254,250 in front and back pay.  We do not agree with appellant that the damages award is "relatively small," "nominal," and unworthy of an attorney fees award.   

            "The reasonable value of counsel's work is a question of fact and [appellate courts] must uphold the district court's findings on that issue unless they are clearly erroneous."  Amerman v. Lakeland Dev. Corp., 295 Minn. 536, 537, 203 N.W.2d 400, 400-01 (1973).  Here, the district court made particularized findings of most of the Paulson factors, including which attorneys and staff to reimburse, the amount of time to be reimbursed, and the reasonable hourly fee to be assessed.  State by Head v. Paulson, 290 Minn. 371, 373, 188 N.W.2d 424, 426 (Minn. 1971) ("Absent any statutory limitations, allowances should be made with due regard for all relevant circumstances, including the time and labor required; the nature and difficulty of the responsibility assumed; the amount involved and the results obtained; the fees customarily charged for similar legal services; the experience, reputation, and ability of counsel; and the fee arrangement existing between counsel and the client.").

            Appellant argues that the fee should at least be reduced because respondent was not successful on all of his claims.  Minnesota courts have supported reduced attorney fee requests discounting the part expended on unsuccessful claims that are unrelated to the successful claims.  See Specialized Tours, Inc. v. Hagen, 392 N.W.2d 520, 542-43 (Minn. 1986).  Appellant argues that respondent's claims of mental anguish and emotional distress were unsuccessful and should not be included in the attorney fee award.  But those claims are not unrelated to the successful claim of age discrimination.  All of respondent's claims relate to respondent's discharge from employment with appellant.  And the district court discounted two associate attorneys' fees.  Whereas the attorneys requested $276,281.79 in fees, the district court disallowed the associates' fees and awarded only $212,534.00.

            Respondent succeeded on his discrimination claim and received back and front pay.  The claims on which he was not successful were related to those upon which he was successful, and the district court considered the Paulson factors and reduced the requested attorney fee award. We conclude that the district court did not abuse its discretion in its award of attorney fees. 

            Affirmed.