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SCHOEN v. CONSUMERS UNITED GROUP

June 6, 1986

Richard D. Schoen, Plaintiff,
v.
Consumers United Group, Inc. and Consumers United Insurance Company, Defendants



The opinion of the court was delivered by: PRATT

 John H. Pratt, U.S.D.J.

 On February 4, 1985, Richard D. Schoen was formally demoted from his position as Chief Financial Officer of Consumers United Group, Inc. (CUG) to temporary Senior Accountant of Consumers United Insurance Company (CUIC), a subsidiary of CUG. His salary dropped correspondingly, from approximately $ 49,000 to $ 31,000. Schoen has brought a diversity action against both CUG and CUIC for age discrimination, breach of contract and other unlawful acts. Before the court are the parties' cross-motions for summary judgment.

 BACKGROUND

 In January 1971, Richard Schoen was hired by International Group Plans (IGP), the corporate predecessor of defendant CUG, as Vice President for Accounting and Data Processing. He was then forty-two years old. Schoen did not sign or receive a formal employment contract. Schoen Dep. at 48. Rather, the President of IGP, James Gibbons, *fn1" sent him "just a very conventional letter" confirming Gibbons' earlier, oral offer of the job at a starting salary of $ 30,000 per year. Schoen Dep. at 21, 247-48.

 Schoen rose to the position of Chief Financial Officer (CFO) of CUG in 1975. His duties as CFO are stated to include preparation and implementation of the annual financial plan, overall cash management of the company, negotiation of bank loans, real estate transactions, legal coordination with outside counsel, management of CUG's investment program, and negotiation with insurance carriers. Schoen Dep. at 66-67.

 The evaluations of Schoen's performance during this period include mixed reviews. On the one hand he is described as "an expert in the field of Accounting," Pl. Ex. 4, whose work was "exemplary." Pl. Ex. 5. On the other hand he is characterized as sloppy, unprofessional and a poor manager. See, e.g., Hopkins Dep. at 63; Def. Ex. 3 at 2-3; Clark Dep. at 69-70. In any event, from 1979 until 1982 Schoen's salary increased periodically, and Schoen never received any direct criticisms of his work. Schoen Aff., Pl. Ex. 1, at para. 5. *fn2"

 Although Schoen retained the title of CFO until 1985, he exercised the duties of that position generally only until the fall of 1982. At that time he was appointed Executive Director of the Institute of Financial Management, a program designed to market the company's financial self-assessment products.

 In the meantime CUG was suffering from a severe financial crisis. In 1980 it had lost its major client, The Retired Officers Association, which had accounted for approximately 55% of the corporation's revenues and 70% of its profits. Faced with the problem of being overstaffed as a result of heavy operating losses, CUG leaders developed an "action plan" to trim the number of company personnel. *fn3" Under the plan, an Audit Team would evaluate the performance of CUG employees. Those who did not fulfill the requisite standards would eventually be terminated. As an alternative, any employee could accept a "buy-out" option, which promised three-months' severance pay in return for resignation.

 The Audit Team never formally evaluated Schoen. Schoen Aff. at para. 8. Yet in November 1983, two of the three members of the Team, Gibbons and Delbert Clark, met with Schoen. Gibbons told Schoen that reorganization of the company left no place for him. Schoen Aff. at para. 9. Gibbons offered Schoen the choice of either resigning immediately and providing accounting services to CUG on a contract basis or remaining at the company, temporarily, at full pay, while looking for another job. He did not offer Schoen the option of remaining at CUG permanently. Schoen Aff. at para. 9. Schoen chose to stay temporarily and look for a job outside the company.

 By August 1984, while continuing to draw his maximum salary, Schoen still had not found alternative employment. That month Gerald Hopkins, Chairperson of the CUG Legislative Assembly, or Board of Directors, apparently sent Schoen a memorandum inviting Schoen to apply for any position in the company or to allow himself simply to be placed in another position, at commensurate salary. See Pl. Ex. 13 at 1. In a January 27, 1985 memo, Hopkins directed Schoen either to resign from CUG or to assume a position as temporary Senior Accountant for CUIC. Id. at 2, 5. When Schoen did not suggest a third option, he was placed at the Senior Accountant position at a salary of $ 31,000. Although Hopkins' memo indicated that this was a "temporary" job and would last three to six months, Schoen continues to hold that position today.

 On February 20, 1985 Schoen filed the present action in this court against CUG and CUIC. His complaint alleged age discrimination in violation of the District of Columbia Human Rights Act, aiding and abetting violation of the Human Rights Act, breach of an alleged contract guaranteeing lifetime employment without reduction in salary, intentional interference with contract, intentional infliction of emotional distress, promissory estoppel, fraud and misrepresentation, and breach of the implied covenant of fair dealing. On March 7, 1985, the CUG Board of Directors voted to remove Schoen from one of his responsibilities, Administrator of CUG's Retirement Plan -- a position he had held since 1982. The Board also failed to reelect Schoen as Secretary of the Board. On September 30, 1985, Schoen filed a supplemental complaint adding a claim of retaliation in violation of the D.C. Human Rights Act based both on his removal as Retirement Plan Administrator and on denial of facilities and training allegedly afforded others of similar rank or position.

 Defendants now move for summary judgment on the entire cause of action. Plaintiff has filed separate cross-motions for summary judgment on the retaliation and breach of contract claims.

 DISCUSSION

 Summary judgment may not be lightly granted. Under Rule 56 of the Federal Rules of Civil Procedure, the moving party must show both absence of any genuine issue of material fact and entitlement to judgment as a matter of law. In analyzing the parties' cross-motions for summary judgment, we are required to view the evidence in the light most favorable to the party opposing the motion. Bloomgarden v. Coyer, 156 U.S. App. D.C. 109, 479 F.2d 201, 208 (D.C. Cir. 1973). If the record indicates the existence of a genuine issue as to any material fact, we may not grant summary judgment and thereby cut off a party's right to have factual questions determined at trial. Bloomgarden, 479 F.2d at 206. With these principles in mind, we turn to plaintiff's specific claims.

 I. Age Discrimination

 Plaintiff's claim of age discrimination in violation of the D.C. Human Rights Act, D.C. Code § 1-2501, et seq., which is the basic thrust of plaintiff's action, triggers the familiar evidentiary analysis of McDonnell Douglas Corp. v. Green, 411 U.S. 792, 36 L. Ed. 2d 668, 93 S. Ct. 1817 (1973). In McDonnell Douglas the Supreme Court outlined the basic allocation of proof in a case of alleged racial discrimination. Although well established in the case law, we set it forth again. First, the plaintiff must establish a prima facie case of discrimination. If he or she succeeds, the burden of production then shifts to the defendant, who must articulate some legitimate, nondiscriminatory reason for the action against the employee. If the defendant fulfills this task, the burden shifts back to the plaintiff, who must prove that the defendant's stated reason is in fact a pretext for discrimination. 411 U.S. at 802, 804. Although framed in the context of a suit under Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e, et seq., this three-tier analysis has been made applicable (with appropriate modifications) to claims of age discrimination under the Age Discrimination in Employment Act (ADEA), 29 U.S.C. § 621, et seq. See, e.g., Cuddy v. Carmen, 224 U.S. App. D.C. 287, 694 F.2d 853 (D.C. Cir. 1982); Sutton v. Atlantic Richfield Co., 646 F.2d 407 (9th Cir. 1981); Loeb v. Textron, Inc., 600 F.2d 1003 (1st Cir. 1979). By analogy the District of Columbia courts have adopted the McDonnell Douglas evidentiary standard specifically in age discrimination cases under the D.C. Human Rights Act. See, e.g., Miller v. American Coalition of Citizens with Disabilities, 485 A.2d 186 (D.C. 1984).

 Before attempting to assess plaintiff's prima facie showing, we need to define the "adverse action" at the base of plaintiff's age discrimination claim. Defendants refer generally to Schoen's "reassignment" or "demotion." Yet the complaint charges defendants with "intentional course of conduct" in violation of the Human Rights Act. More than a simple demotion, this "course of conduct" apparently encompasses three distinct junctures of Schoen's career at CUG: (1) the assumption of his CFO duties by others in the fall of 1982 and his assignment to the financial self-assessment products, (2) defendants' request in November 1983 that Schoen leave CUG altogether, and (3) the February 1985 reassignment to Senior Accountant, with accompanying salary reduction. Thus, while Schoen was formally "demoted" in February 1985, our analysis of this final employment decision incorporates the various actions that led up to it.

 By way of refinement of its holding, the Supreme Court in McDonnell Douglas prescribed four factors on which a plaintiff may base a prima facie showing of discrimination. Although lower courts have varied both the wording and order of these factors, the Court of Appeals for this Circuit has held that a plaintiff satisfies the initial burden in proving a prima facie case of alleged age discrimination in hiring by showing that he or she (1) belongs to the statutorily protected age group, (2) was qualified for the position, (3) was not hired, and (4) was disadvantaged in favor of a younger person. Cuddy v. Carmen, 694 F.2d at 857; see also Coburn v. Pan American World Airways, Inc., 229 U.S. App. D.C. 61, 711 F.2d 339, 342 (D.C. Cir. 1983). This formulation need not be limited to hiring since we can easily substitute a demotion requirement for the third factor, failure to be hired.

 The cumulative nature of the actions that led to Schoen's reassignment allow us to use this four-part test only as a starting point. The facts of this case can sensibly be tested by the first and third factors, and Schoen facially satisfies both requirements. In prohibiting age discrimination in employment, the D.C. Human Rights Act broadly defines "age" as "18 to 65 years of age," for employment purposes. D.C. Code § 1-2502(2). Schoen therefore falls within the protected age group, and defendants do not dispute that they demoted Schoen. Memorandum in Support of Defendants' Motion for Summary Judgment (Def. Memo.) at 24-25; see Hopkins Dep. at 88.

 The second factor, qualification for position, provides a less certain guideline for measuring the existence of discrimination under the facts here presented. Unlike most discrimination cases, where the plaintiff sought or held a discrete job, the present case involves a two-and-a-half year evolution of duties. Schoen's success in proving he was qualified depends on what position he is considered to have held at the time of his demotion.

 The list of achievements that Schoen presents, see Plaintiff's Memorandum in Opposition to Defendants' Motion for Summary Judgment (Pl. Opp.) at 6, does not persuade us that he was qualified. Defendants offer substantial evidence of criticisms of Schoen's work, despite these accomplishments. See Def. Memo. at 6-12. Although Schoen's evaluations include some positive comments, see Pl. Ex. 3 ("a job well done!"); Pl. Ex. 4 at 2 ("reliable, cooperative, knowledgeable and trustworthy"); Pl. Ex. 5 ("just a few examples of the fine comments made about Mr. Schoen"), they do not demonstrate his overall qualification for the job, particularly since the last written evaluation was prepared in January 1979 and plaintiff has presented no evidence of positive performance at the time his CFO duties were assumed by others, more than three and a half years later. Moreover, even if we assume Schoen was qualified to be CFO, we cannot conclude he has therefore made out a prima facie case of age discrimination. As we discuss below, in connection with the fourth factor of the McDonnell Douglas/Cuddy test, there is simply no evidence in the record that creates an inference that defendants even considered Schoen's age when they demoted him.

 The reassignment in February 1985 to the position of Senior Accountant under the supervision of a younger employee offers little insight into the issue of discrimination. By the time Schoen was actually demoted in February 1985, his duties as CFO had long been assumed by others, mainly Gibbons. Defendants also abolished the job title of Chief Financial Officer. Once Schoen's job disappeared, it is difficult to see how he could have been disadvantaged in favor of anyone else.

 Furthermore, we can find no discrimination in comparing Schoen to his chief replacement, Gibbons. Although the parties have not identified Schoen's birthdate, the record pegs him as only a year or two older than Gibbons. While this differential may technically satisfy the requirement of being disadvantaged in favor of a younger person, we can infer no discrimination from the assumption of duties by the company president and chief benefactor, a man so close in age to plaintiff. See Douglas v. Anderson, 656 F.2d 528, 533 (9th Cir. 1981) ("If the replacement is only slightly younger than the plaintiff, then it is less likely that an inference of discrimination can be ...


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