NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 05a0152n.06
Filed: February 25, 2005
No. 03-4269
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
PAUL SCHRAM, )
)
Plaintiff-Appellant, )
) ON APPEAL FROM THE
v. ) UNITED STATES DISTRICT
) COURT FOR THE SOUTHERN
) DISTRICT OF OHIO
SCHWAN’S SALES )
ENTERPRISES, INC., )
) OPINION
Defendant-Appellee. )
_______________________________________)
Before: SILER and ROGERS, Circuit Judges, and CALDWELL,* District Judge.
KAREN K. CALDWELL, District Judge. Plaintiff-Appellant Paul Schram (“Schram”)
appeals the district court’s grant of summary judgment to Defendant-Appellee, Schwan’s Sales
Enterprises, Inc. (the “Company”). Schram claims that the Company terminated him because of his
age. We AFFIRM in part, REVERSE in part and REMAND to the district court for proceedings
not inconsistent with this opinion.
I. FACTS.
Schram was 57 when the Company terminated him from his position as division manager
of the Company’s Southwest Ohio Division, a position he had held for approximately 11 years. He
*
The Honorable Karen K. Caldwell, United States District Judge for the Eastern District
of Kentucky, sitting by designation.
had been employed by the Company for approximately 20 years.
Prior to the date that Schram was terminated as division manager, the Company had four
divisions in Ohio under the control of a regional manager, Gary Danbrook: 1) the Lake Division
with Paul Dodge as division manager; 2) the Northeast Division with Dan Stillwagon as division
manager; 3) the Ohio Division with Ron Moffis as division manager; and 4) the Southwest Ohio
Division with Plaintiff Schram as division manager.
In 2001, the Company began a national reorganization in an effort to increase profitability.
As part of the reorganization, in June, 2001, the Company decided to consolidate its four Ohio
divisions into three divisions. In his deposition, Regional Manager Danbrook stated that the
Company decided to divide Schram’s Southwest Ohio Division into the other three divisions
because it was the smallest of the four divisions. Danbrook testified that the decision to terminate
Schram as division manager was made by Danbrook and two other Company employees.
On June 19, 2001, Danbrook met with Schram and delivered a letter from the Company
which stated that it would “serve as formal notice of your termination from the position of Division
Manager with [the Company], effective June 19, 2001. . . Although you will receive your regular
pay through July 19, 2001, you are relieved of your duties effective immediately.” In the letter, the
Company gave Schram two options. He could either receive his severance pay of $11,294.50 or he
could look for other positions within the Company during the next 30 days.
Regional Manager Danbrook offered Schram the position of sales manager in Middletown,
Ohio with the same salary and benefits Schram had received as division manager. Schram did not
accept the sales manager position. He did not report to work again after the June 19, 2001 letter
terminating him as division manager. He was paid for an additional 30 days, through July 19, 2001.
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Schram decided not to look for another position in the Company and called Danbrook to inform him
that he “chose to leave” the Company.
After the reorganization, the Company’s three new Ohio divisions were 1) the Northwest
Division with Paul Dodge as manager; 2) the Northeast Ohio Division with Dan Stillwagon as
manager; and 3) the Southwest Ohio Division with Ron Moffis as manager. The day after Regional
Manager Danbrook delivered the letter terminating Schram from the position of division manager,
Ron Moffis – the manager of the newly created Southwest Ohio Division– announced his retirement.
Prior to the date that Danbrook terminated Schram as division manager, Moffis had already notified
Danbrook that he intended to retire but had not “made it final.”
Danbrook testified that, after Moffis notified Danbrook that he was going to retire, the
Company “posted” the division manager position from June 21, 2001 to July 4, 2001. Twenty-one
people applied for the job, 13 of which were interviewed. Froman Adler, a 35-year old who had
been a sales manager for the Company in Kentucky for approximately six years, was selected for
the position. Adler began working as division manager for the Southwest Ohio Division on July 30,
2001. The Company never told Schram that one of the three division manager positions had become
vacant.
Schram filed a complaint against the Company asserting claims of age discrimination under
Ohio Rev. Code § 4112.02 and tortious wrongful discharge in violation of Ohio public policy. The
district court granted the Company’s Motion for Summary Judgment, finding that Schram had failed
to establish a prima facie case of age discrimination and that his public policy claim failed because
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he was not “discharged” from the Company.1
II. ANALYSIS
This Court reviews the district court’s grant of summary judgment de novo. Lautermilch v.
Findlay City Schools, 314 F.3d 271, 274 (6th Cir. 2003), cert. denied, 540 U.S. 813 (2003).
“Summary judgment is appropriate if there is no genuine issue of material fact and the moving party
is entitled to judgment as a matter of law.” Id. The Court must view all evidence in the light most
favorable to Schram. Matsushita Elec. Indust. Co. v. Zenith Radio Corp., 475 U.S. 574, 587-88
(1986).
Schram asserts a claim of age discrimination under Ohio Rev. Code § 4112.02. In analyzing
age discrimination claims under the Ohio statute, Ohio courts have adopted the framework
established in federal case law for claims asserted under the Age Discrimination in Employment Act
("ADEA"), 29 U.S.C. § 621, et seq. Peters v. Lincoln Elec. Co., 285 F.3d 456, 469 (6th Cir.
2002)(citing Plumbers & Steamfitters Joint Apprenticeship Comm. v. Ohio Civil Rights Comm’n,
421 N.E.2d 128, 131 (Ohio 1981); Mauzy v. Kelly Services, Inc., 664 N.E.2d 1272, 1276 (Ohio
1996); Frank v. Toledo Hospital, 617 N.E.2d 774, 778 (Ohio Ct. App. 1992)).
Under the ADEA, claims are analyzed using a framework generally called the McDonnell
Douglas burden shifting framework. See O’Connor v. Consolidated Coin Caterers Corp., 517 U.S.
308, 310-13 (1996)(modifying the McDonnell Douglas framework for ADEA cases). Under that
framework, an employee bringing an age discrimination claim must first establish a prima facie case
by showing that: (1) he was at least 40 years old at the time of the alleged discrimination, (2) he was
1
Schram’s brief on appeal does not address his public policy claim and, therefore, the
claim is abandoned and not reviewable. Robinson v. Jones, 142 F.3d 905, 906 (6th Cir. 1998).
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subjected to an adverse employment action, (3) he was otherwise qualified for the particular position
at issue, and (4) he was replaced by someone substantially younger. Bush v. Dictaphone Corp., 161
F.3d 363, 368 (6th Cir. 1998).
This framework is modified if the employee is discharged in connection with a reduction in
force (“RIF”), where a plaintiff is not replaced by any other employee. See Scott v. Goodyear Tire
& Rubber Co., 160 F.3d 1121, 1126 (6th Cir. 1998). Instead of establishing that he was replaced by
a substantially younger worker, the plaintiff who is discharged as part of a RIF must present
“additional direct, circumstantial, or statistical evidence tending to indicate that the employer singled
out the plaintiff for discharge for impermissible reasons.” Barnes v. GenCorp Inc., 896 F.2d 1457,
1465 (6th Cir. 1990).
If the plaintiff successfully establishes a prima facie case of age discrimination, the burden
then shifts to the defendant to produce evidence of a non-discriminatory reason for its action which,
in a RIF, will necessarily be the alleged reduction in force. Godfredson v. Hess & Clark, Inc., 173
F.3d 365, 371 (6th Cir. 1999). If the defendant meets this burden, then the plaintiff must demonstrate
that the defendant’s proffered reason is pretextual. Id. A plaintiff may illustrate pretext by showing
that the proffered reason (1) has no basis in fact, (2) did not actually motivate the defendant’s
challenged conduct, or (3) was insufficient to warrant the challenged conduct. Hopson v.
DaimlerChrysler Corp., 306 F.3d 427, 434 (6th Cir. 2002).
The presumption of discrimination “drops out of the picture” once the defendant meets its
burden of production. Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 143 (2000).
Nevertheless, the trier of fact may still consider the evidence establishing the plaintiff’s prima facie
case and inferences properly drawn therefrom in determining whether the defendant’s explanation
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for its action is pretextual. Id.
The district court analyzed this case as a RIF and determined that Schram had satisfied the
first and third prongs of the McDonnell Douglas prima facie case– that he was a member of the
protected class and that he was qualified for the position of division manager. Nevertheless, the
district court found that Schram had failed to produce sufficient evidence that he suffered an adverse
employment action and that he was wrongly singled out for discharge as required under the second
and fourth prongs of the McDonnell Douglas framework.
A. Reduction in Force.
As his first argument on appeal, Schram argues that the district court erred in analyzing this
case as a RIF. In Barnes, this Court clarified what constitutes a “true work force reduction,” stating:
A work force reduction situation occurs when business considerations cause an
employer to eliminate one or more positions within the company. An employee is
not eliminated as part of a work force reduction when he or she is replaced after his
or her discharge. However, a person is not replaced when another employee is
assigned to perform the plaintiff’s duties in addition to other duties, or when the
work is redistributed among other existing employees already performing related
work. A person is replaced only when another employee is hired or reassigned to
perform the plaintiff’s duties.
Barnes, 896 F.2d at 1465.
It is undisputed that the Company did, in fact, reduce the number of Ohio division managers
from four to three. Eliminating a single job can constitute a legitimate RIF. See Barnes, 896 F.2d
at 1465 (a RIF “occurs when business considerations cause an employer to eliminate one or more
positions”). Schram argues, however, that this case should still not be considered a RIF because,
after learning of Division Manager Moffis’ impending retirement, the Company had no reason to
reduce the number of division manager positions.
While the Company’s knowledge of Moffis’ retirement may be evidence that the Company
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had no need to discharge Schram as division manager in the RIF, it is not evidence that the Company
had no need to reduce the number of division manager positions. Furthermore, even assuming that
Schram did have some evidence that the Company did not need to reduce the number of division
manager positions, that evidence cannot refute the undisputable fact that the Company did, indeed,
reduce the number of division manager positions by one. Any evidence that the Company did not
need to do so is irrelevant to the determination of whether a RIF occurred.
In determining whether this is a true RIF, the relevant question is whether Adler “replaced”
Schram. Pursuant to Barnes, Adler did not “replace” Schram if 1) Adler was assigned to perform
Schram’s former duties in addition to other duties; or 2) Schram’s former duties were redistributed
among other existing employees already performing related work. Id.
Schram acknowledges that, when the Company’s four Ohio divisions were reduced to three,
there was a “realignment and enlargement” of the four former divisions. In his deposition
testimony, Schram stated that responsibility for one of the depots within his former division went
to Paul Dodge, the manager of the newly formed Northwest Division; and that two or three depots
from Ron Moffis’ former Ohio Division became part of the newly formed Southwest Ohio Division
that would ultimately be managed by Adler.
Thus, the evidence before the district court was that, as head of the newly formed Southwest
Ohio Division, Adler was assigned to perform Schram’s former duties in addition to other duties,
including, for example, responsibility for two or three depots from Ron Moffis’ former Ohio
division. Likewise, the evidence before the district court was that Schram’s former duties were
redistributed among the Company’s existing employees already performing related work, including,
for example, responsibility for at least one of Schram’s former depots that was redistributed to Paul
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Dodge. Accordingly, Schram was not “replaced” by Adler as that term has been defined by this
Court, and the district court correctly analyzed the case as a RIF.
This does not mean, however, that evidence that the Company knew of Moffis’ imminent
retirement before it terminated Schram and evidence that the Company hired the 35-year old Adler
after it terminated Schram are irrelevant to Schram’s age discrimination claim. As will be explained
further below, the district court should have considered these facts under the fourth prong of the
McDonnell Douglas analysis as evidence that, in carrying out the RIF, the Company singled Schram
out for discharge because of his age. In addition, this evidence should be considered in determining
whether the RIF was pretext for age discrimination.
B. Adverse Employment Action.
The district court held that Schram failed to establish that he was subject to an adverse
employment action because he was not actually terminated from the Company but instead
“voluntarily quit.” The district court noted that Schram had offered no evidence that his acceptance
of the new position in Middletown, Ohio would have been an adverse employment action because,
while the title was a step down, there would have been no decrease in salary or benefits and there
was no evidence that “it entailed significantly diminished responsibilities.”
An adverse employment action under the ADEA is shown by a “materially adverse change
in the terms and conditions of employment [and] must be more disruptive than a mere inconvenience
or an alteration of job responsibilities.” Ford v. General Motors Corp., 305 F.3d 545, 553 (6th Cir.
2002) (quoting Hollins v. Atlantic Co., 188 F.3d 652, 662 (6th Cir. 1999)). An adverse employment
action may be established by a “termination of employment, a demotion evidenced by a decrease
in wage or salary, a less distinguished title, a material loss of benefits, significantly diminished
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material responsibilities, or other indices that might be unique to a particular situation.” Id.
The issue then in this case is whether, when the Company terminated Schram as division
manager and offered him instead a sales manager position, this constituted a demotion. Regional
Manager Danbrook testified that a sales manager manages “a smaller group of people” than a
division manager. Furthermore, as sales manager, Schram would manage a single city depot –
Middletown – while a division manager manages an entire state division consisting of multiple
depots. Danbrook also testified that, after the RIF, managers of the larger divisions had an
opportunity for higher pay and that “the larger division, the more pay.” Finally, Schram had been
a sales manager at the Company before being made division manager. Accordingly, Schram
presented sufficient evidence from which a reasonable jury could conclude that his acceptance of
the sales manager position would have constituted a demotion from his position as division manager.
C. Evidence that Schram was Singled Out for Discharge Because of his Age.
Under the fourth prong of the McDonnell Douglas framework in a RIF case, Schram must
present “additional direct, circumstantial, or statistical evidence tending to indicate” that the
Company singled him out for discharge for impermissible reasons. Scott, 160 F.3d at 1126 (quoting
Barnes, 896 F.2d at 1465). As discussed above, it is under this prong that the district court should
have considered evidence that, at the time he terminated Schram as division manager, Regional
Manager Danbrook was aware that Division Manager Moffis would soon retire. It is also here that
the district court should have considered that, instead of offering Schram a larger division to
manage, the Company terminated him and offered the job to Adler.
Danbrook testified that, before he discharged Schram as division manager, Moffis had given
notice that he was going to retire. In fact, Moffis formally announced his retirement just the day
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after Danbrook discharged Schram as division manager. A reasonable juror could conclude from
this evidence that, at the time that he terminated Schram as division manager, Danbrook was aware
that Moffis would soon retire. A reasonable juror could also conclude that, given this knowledge,
even after the Company had determined to eliminate one division manager position, the Company
had no need to discharge Schram as division manager. The Company could have simply offered
Schram the position of division manager of the larger Southwest Ohio Division, just as it offered
Dodge and Stillwagon larger divisions to manage.
Instead, however, the Company terminated Schram as division manager and hired Adler to
manage the new Southwest Ohio Division after Moffis’ retirement. Schram was a 57-year old with
20 years of experience at the Company and 11 years experience as division manager. Adler was a
35-year old with six years of experience as a sales manager at the Company. This circumstantial
evidence is sufficient to create an issue of fact as to whether, in implementing the RIF, the Company
singled Schram out for discharge as division manager because of his age. Accordingly, the district
court incorrectly dismissed Schram’s age discrimination claim on the basis that Schram had failed
to put forth sufficient evidence to establish a prima facie case.
D. Pretext.
Having found that Schram presented a prima facie case of age discrimination, the next issue
is whether Schram has produced sufficient evidence from which a jury could conclude that the RIF
was not the true reason for his discharge as division manager but was a pretext for age
discrimination. A reasonable juror could conclude from the evidence presented that, after deciding
to implement the RIF, the Company had no need to terminate Schram as division manager because
it was aware that another division manager would soon retire. A reasonable juror could also
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conclude from the fact that the Company chose to terminate 57-year old Schram as division manager
and offer the vacant division manager position to 35-year old Adler, that the RIF did not actually
motivate the Company to discharge Schram as division manager and that, instead, the Company
discharged him because of his age.
III. CONCLUSION
Because we conclude that Schram has presented sufficient evidence to support a prima facie
case of age discrimination, the district court ruling to the contrary should be reversed. We further
conclude that the district court had sufficient evidence of pretext to create a jury question on that
issue. Accordingly, we REVERSE the district court’s Order granting the defendant summary
judgment to the extent it dismissed Schram’s age discrimination claim under Ohio Rev. Code §
4112.02; we otherwise AFFIRM the district court; and we REMAND to the district court for
further proceedings not inconsistent with this Opinion.
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