CLEM LYCKBERG, Complainant
FIRST REALTY GROUP, Respondent
An examiner of the Department of Industry, Labor and Human Relations issued a decision in the above-captioned matter on July 26, 1984. Complainant filed a timely petition for review of the examiner's decision by the Commission and both parties subsequently submitted written arguments.
Based upon a review of the record in its entirety the Labor and Industry Review Commission issues the following:
The attached decision of the examiner is affirmed subject to the following modification:
In paragraphs 2 and 3 of the examiner's Conclusions of Law the word "clear" is deleted.
As modified, the examiner's decision shall stand as the FINAL ORDER herein.
Dated and mailed September 25, 1985
/s/ David A. Pearson, Chairman
/s/ Hugh C. Henderson, Commissioner
/s/ Carl W. Thompson, Commissioner
In Texas Dept. of Community Affairs v. Burdine, 450 U.S. 248, 25 FEP Cases 113 (1981), the U. S. Supreme Court summarized and clarified the basic allocation of burdens and order of presentation of proof in a case alleging discriminatory treatment.
"First, the plaintiff has the burden of proving by a preponderance of the evidence a prima facie case of discrimination. Second, if the plaintiff succeeds in proving the prima facie case, the burden shifts to the defendant to 'articulate some legitimate, nondiscriminatory reason for the employe's rejection.' Third, should the defendant carry this burden, the plaintiff must then have an opportunity to prove by a preponderance of the evidence that the legitimate reasons offered by the defendant were not its true reasons, but were a pretext for discrimination.
The nature of the burden that shifts to the defendant should be understood in light of the plaintiff's ultimate and intermediate burdens. The ultimate burden of persuading the trier of fact that the defendant intentionally discriminated against the plaintiff remains at all times with the plaintiff."
The Complainant "need not prove that the employer's articulated reason was false. Instead, the (complainant) must prove that age was a determining factor in the employer's decision; the employer's articulated reason may in fact have been true, but if age was also a determining factor in the employer's decision, the (complainant) has carried his burden of proof." Golomb v. Prudential Insurance Co., 688 F. 2d 597, 29 FEP Cases 1491, 1493 (7th Cir. 1982); LaMontagne v. American Convenience Products Inc., 750 F. 2d 1405, 1409 (7th Cir. 1984) (emphasis in original). The discriminatory conduct complained of may not be upheld when one of the motivating factors is a discriminatory reason, no matter how many other valid reasons exist for such conduct. State of Wis. Dept. of Employment Relations v. WERC, 122 Wis. 2d 132 (1985); Muskego-Norway C.S.J.S.D. No. 9 v. WERB, 35 Wis. 2d 540, 151 N.W. 2d 617 (1967).
To establish a prima facie case of age discrimination Complainant, Lyckberg, was required to prove by a preponderance of the evidence that he was within the protected age group, that he was performing his job at a level that met Respondent's legitimate expectations but nevertheless was subject to conditions of employment and/or demoted "under circumstances which give rise to an inference of unlawful discrimination." Burdine, supra, 25 FEP Cases at 115.
There appears to be no real basis for contending that he Complainant has not established a prima facie case of age discrimination. (1) In any case, when the Respondent failed to persuade the examiner to dismiss the action for lack of a prima facie case, and responded to the Complainant's proof by offering evidence of the reason for Complainant's rejection, the factfinder is then required to decide whether the conduct complained of was discriminatory under the Act. U. S. Postal Service Board of Governors v. Louis Aikens, 460 U.S. 711, 31 FEP Cases 609 (1983). Thus the actual dispute in this case centers on whether the Complainant has proved by a preponderance of the evidence that the legitimate reasons offered by the Respondent were not its true reasons, but were a pretext for discrimination.
Complainant first asserts that Respondent's argument that Complainant was removed as manager because sales in the West office were down in late 1981 and that this was due substantially to Complainant's ineffective management is a false and misleading pretext. In support of this position Complainant argues that his replacements did not do as well as he had done as the sole manager of the West office; that not just the West office, but all of Respondent's offices suffered a substantial decrease in sales. Complainant further argues that because of its size relative to the other First Realty offices, the West office absorbed a much larger share of the overall corporate expense so that the expense factors subtracted from brokerage income to determine profit or loss in that office were significantly greater than the corresponding expense figures for the other offices; that Imhoff acknowledged in sworn U. C. testimony that expenses were prorated based on the number of sales associates per office, and that under Complainant, the West office was "carrying a heavier load" than the other offices but "still showing a good profit."
However, Complainant mischaracterizes the Respondent's position. The Respondent has never contended that the drop in sales at the West office was solely attributable to Complainant's ineffectiveness. Respondent's actual position was that Complainant's ineffectiveness, along with the relative effectiveness of Baker and Rasmussen, warranted the change in managership after the West and Central offices were merged. Further, while all offices may have sustained a decrease in sales it was the West office, because of its lucrative real estate market and number of sales associates, that was most important to the company. Despite its larger share of expenses the West office was expected to carry the company. Respondent's financial statements showed that while the West office had led all other offices in gross and net brokerage income through 1979, by 1980 the Middleton office, with only about one-half the number of sales associates as the West office, nearly equalled the West office in income production, and by the end of 1981 it had surpassed the West office in income production. Finally, how Complainant's replacements faired after November 1981 is not relevant. The decision to remove Complainant as manager was made in November 1981 and Respondent's actions must be examined based on its explanation for its decision to replace Complainant at that time.
Secondly, Complainant argues that contrary to Respondent's contention he could not seriously have been given consideration as a West office co-manager in the fall of 1981 because as of the preceding July, Imhoff and the other shareholders had already decided that Complainant would be separated from the company both as a shareholder and an employe. Complainant points to testimony by Imhoff at Complainant's U. C. hearing where Imhoff testifies that after the July 28 luncheon and subsequent jogging meeting with Complainant "the question was not whether Complainant was going to be separated, it was only when." (TR IV, pp. 47-48) Complainant also argues that further evidence that the whole matter of the partners discussing among themselves who could work together effectively was a sham and a pretext is found in Baker's testimony on cross-examination that when Imhoff told Baker to discuss with Complainant whether he could work with Complainant, Baker had no intention of working with Complainant and Imhoff knew it.
Whether the Complainant was or was not given serious consideration for a West office co-manager position after being told he would be separated from the company appears to have little significance. The fact is Respondent had determined that Complainant had become ineffective as a manager and Complainant has not shown that his abilities as a manager were equal to or greater than those of Baker and Rasmussen.
Complainant further argues that Respondent's contention that Complainant was no longer an effective manager was refuted by the testimony of others in management, by other real estate professionals and Respondent's own position expressed prior to the hearing. In support of this argument Complainant refers to testimony given by Patric Martin (nonshareholder manager of Waunakee office thru Aug. '81), Beverly Zarnstorff (sales associate under Complainant at West office and subsequently named assistant manager under Baker and Rasmussen at the West office), and James Gill. Regarding Respondent's position prior to the hearing, Complainant states that in June 1982 when Respondent was trying to defeat Complainant's claim for U. C. benefits, Respondent stated in a June 1982 letter to Job Service that at that time Complainant "was the most qualified individual in the company to head the new division that we established as he had taken specialized training over the years, earning CRB and CRS designations." (emphasis in original)
While there was favorable testimony from witnesses regarding Complainant's effectiveness as a manager this testimony has very little relevance in establishing any pretext on the part of Respondent because these witnesses were not asked and did not express any opinion regarding the relative capabilities of Complainant, Rasmussen and Baker. Further, most of these witnesses were not familiar with the company's financial position, not in any position to analyze the Respondent's needs and were not at all involved in the decision-making process. Finally, the fact that Complainant may have been the most qualified individual to head First Affiliated Referral, Inc. (FAR), does not necessarily speak to his qualifications for managing the West office during the depressed market conditions which existed in late 1981. Respondent has never contended that Complainant was totally incompetent, only that Respondent felt the Baker/Rasmussen combination was by far in the best interests of the company in the situation it faced. They were active listers and sellers, they were more knowledgeable about creative financing, they worked longer hours; they were better recruiters; most important, they were team players who were more concerned about the long-range success of the company than their own short-term success.
Complainant also argues that assertions by Imhoff, Rasmussen and Baker that Complainant was not working as hard as others, putting enough hours in at the office and making himself available to render assistance to the salespeople were raised for the first time at the hearing and that at no time did the Respondent produce any correspondence, memo or record of any kind indicating that prior to the time Complainant was removed, he had ever been admonished, criticized or warned about any lacking in his devotion of time or effort to the West office. Complainant further asserts that Imhoff tried to get around this lack of written evidence by claiming that he frequently criticized Complainant at the directors' meetings, but this testimony was discredited when Imhoff acknowledged his prior testimony that while there was discussion at the directors' meetings about all shareholders putting in more hours, he never singled Complainant out or criticized him for not working as hard as others. Complainant also argues that Respondent's assertions regarding his nonavailability were directly refuted by an overwhelming number of the salespeople.
This argument by Complainant must also fail. A lack of written warnings is not surprising because the Complainant is not a common employe who has periodic reviews and constant supervision, but an equal owner. Singling Complainant out would certainly be uncomfortable and should be unnecessary. Moreover, it is undisputed that the directors did at times discuss the need for all of the shareholders to work longer hours; that in comparison to Baker and Rasmussen Complainant did much less listing and selling which demands long and additional hours.
Complainant next argues that Respondent's contention that there were complaints from salespeople in the West office about Complainant's fairness in distributing referrals, disharmony in the West office and that the salespeople had to frequently call on other managers for help is contrary to the overwhelming evidence. However, the testimony of Imhoff indicates otherwise.
Complainant further argues that the claim by Respondent that he was removed from the West office because he was going to retire anyway is a pretext and is typically inconsistent with other positions by the Respondent. Complainant asserts that it insults one's intelligence for the Respondent to claim it sincerely believed Complainant was going to retire at age 58 and also to claim that Complainant was removed from the West office as a job transfer to manage timesharing and referral activities because he was the "most qualified individual in the company to head the new division." (emphasis in original) Complainant further asserts that Imhoff acknowledges his earlier testimony at the U. C. hearing where he stated that at the July 28 luncheon he was not discussing early retirement, but involuntary termination as both an owner and an employe.
However, at no point did Respondent ever claim that Complainant was removed from the West office because he was going to retire anyway. Respondent asserted that the fact was that Complainant had in years past indicated he may retire early; that as a result when Imhoff and Complainant were discussing Complainant's ineffectiveness in July, Imhoff brought up retirement as a potentially graceful way of effectuating a separation. Further, it was only a general discussion; no timetable was set. When Complainant indicated he was in no position to retire, the subject was not brought up again. Accordingly, it is not surprising or sinister that the Respondent would assign the Complainant to develop the new programs in November.
The Complainant has also argued that the Respondent attempted to attribute Complainant's removal to misconduct because he disclosed information contained in confidential company records to the West office sales associates. Complainant asserts that Respondent never identified what company records were involved and there was no memoranda connecting Complainant with any such conduct. He also asserts that Rasmussen acknowledged on cross-examination that he did not mean to say Complainant showed corporate records to sales associates but that he simply gave them information they didn't need to know. Complainant then admits, however, that he would on occasion let his salespeople know when the company was doing well or, conversely, when sales were down in order to help install a spirit of pride in work or when necessary to motivate them to work harder; that it was the office manager's responsibility to motivate the sales force.
But whether or not it was good business practice to disclose information contained in confidential company records is not the issue; Complainant admits that he revealed financial information despite the wishes of the remaining shareholders that he not do so. It was this type of conduct that caused Respondent to conclude that Complainant refused to be a team player.
Complainant also argues that the Respondent's suggestion that Complainant was not devoting enough time personally to listing and selling real estate is still another inconsistency put forth by Respondent. Complainant argues that managing an office the size of the West office prohibited Complainant from spending a substantial amount of time attempting to obtain new listings and to sell; that it is inconsistent for the Respondent to complain that Complainant was not available to help his salespeople in solving problems when at the same hearing they said he should have been doing less managing and more listing and selling on his own; that Respondent's inconsistency is further shown by the claim of Imhoff and Amato that because production was down in the West office in 1981 they determined there was a need to have two full-time managers and an assistant manager.
However, the Respondent never claimed that the Complainant was removed because he should have been doing less managing and more listing and selling. Respondent's actual statement was that the directors felt the co-managers of the merged West office should have characteristics similar to the co-managers of the Middleton office -- i.e., aggressive listers/sellers. This characteristic had proven to be more successful in the depressed market, as the Middleton office out-performed the crucial West office.
The Complainant further argues that Respondent's contention that Complainant did not recruit new people by utilizing career night and other recruiting devices is another unsubstantiated pretext. Further, that Respondent's assertion that Complainant was a poor recruiter is also inconsistent with their appointment of him to take full responsibility for recruiting salespeople in the new timesharing and FAR programs. While Complainant testified that he was a good recruiter and that he attended almost all career nights, the Respondent's witnesses presented contrary testimony. Furthermore, the new programs were not crucial to the success of the company while the West office's performance was.
Finally, Complainant argues that there were other isolated criticisms and claimed "complaints" from Complainant's salespeople stated by Respondent's principal officers but in no way corroborated by the testimony of the numerous West office salespeople that testified. As an example, Complainant asserts that while Baker complained that he would not let his secretary type offers to purchase for other salespeople, Complainant felt it was logistically impossible to do this with as many salespeople as there were in the West office and one secretary. Further, that Complainant imposed a rule that the secretary could type offers for salespeople only when the workoad of the secretary permitted and that this caused no problem with the salespeople.
However, this incident cited by Complainant was only one of several examples given by Respondent which indicated that Complainant placed the West office above the company as a whole and that he would not be a team player. Other examples given by Respondent included refusing salespeople from other offices the use of the West office facilities like the copy machine and phones, giving his sales associates confidential information, voting for programs designed to benefit the company at board meetings then telling his salespeople not to support the programs, and keeping forms under lock and key at times so other offices could not use them. This evidence was uncontroverted.
The Commission is not persuaded that the preponderance of the evidence supports a showing that Respondent's stated reasons for its actions were pretextual and that unlawful age discrimination has occurred. A number of factors leads the Commission to this conclusion. First, it was undisputed that by late 1981 Respondent was undergoing severe economic difficulties due to the recession and needed to make changes in its organization in order to survive. The West office was the most important office in the company, and its performance was crucial. Secondly, it is perfectly sensible that the Respondent would be seeking aggressive listers and sellers to manage its offices in a depressed market, and the Complainant did not fit that mold. The Complainant basically admits that regardless of the size of his office he had no desire to list and sell properties. Thirdly, although the Complainant produced a large number of sales associates and others to present favorable testimony as to his effectiveness (several of which were long-time personal friends of Complainant or had only worked under Complainant a short time during 1981) none of those witnesses were ever asked to compare Complainant's abilities as a manager with those of Baker and Rasmussen. Additionally, while Complainant has made much ado about Respondent's failure to produce any correspondence, memos or records regarding such matters as his devotion of time or effort at the West office and his disclosure of confidential company information, Complainant never asserted that he put in more hours as all the other shareholders agreed to do; he admitted to disclosing confidential company information to sales associates despite being asked by his fellow shareholders to discontinue that practice. In short, the Commission does not believe that Complainant established that he was a "team player," contrary to what the Respondent has argued.
Citing a Personnel Commission decision, Conklin v. Dept. of Natural Resources, Case No. 82-PC-ER-29 (decided July 21, 1983) and Perryman v. Johnson Products Co., 31 FEP Cases 93 (11th Cir. 1983), Complainant further argues that where there is direct evidence of discriminatory intent, the burden shifts to the employer to prove by a preponderance of the evidence that the adverse action claimed would have been taken in the absence of a discriminatory motive.
Complainant argues that in this case such direct evidence includes Imhoff's June 1981 statement at the annual board meeting that Complainant and Gill were the two oldest and would be the next to go, Imhoff's statement to Complainant following the July termination luncheon that Complainant was at an age that he should think about retirement and the comments of Frederick in response to Complainant's and Gill's asking him why they were being terminated, that when his time came, he would not fight it. Complainant argues that if the Respondent could have explained these comments in a nondiscriminatory context, such testimony would have been presented. But the Respondent could not and did not provide an innocent explanation or context for these comments. Accordingly, this testimony should serve as direct evidence that age was a factor in Complainant's removal.
Two problems immediately arise under Complainant's direct evidence argument. Judge Probst for the Northern District of Alabama, has succinctly set forth these difficulties in the case of Spanier v. Morrison's Management Services, 38 FEP Cases 177 (1985). First, Judge Probst notes that the U. S. Supreme Court has held that in a disparate treatment case "the ultimate burden of persuading the trier of fact that the defendant intentionally discriminated against the plaintiff remains at all time with the plaintiff," citing Texas Dept. of Community Affairs v. Burdine, 450 U.S. 248, 25 FEP Cases 113, 115 (1981) (emphasis in original). Judge Probst states that there has been no Supreme Court case which has held that a proof of an age, sexually or racially biased statement shifts the burden of persuasion.
Judge Probst concludes that in the 11th circuit cases where the courts have shifted the burden of persuasion when direct testimony of biased statement existed, "apparently (it is) held that evidence of such a statement is tantamount to a finding that the illegal motive 'is proved to have been a substantial factor in the employment decison.' " Spanier , supra at 179. (emphasis in original). Judge Probst states that:
"This court has always assumed that direct evidence of bias can be weighed in determining whether a plaintiff has met his or her burden of proving either a prima facie case or pretext. This position was apparently supported by the following language in Burdine.
The plaintiff retains the burden of persuasion. She now must have the opportunity to demonstrate that the proffered reasons was not the true reason for the employment decision. This burden now merges with the ultimate burden of persuading the court that she has been the victim of intentional discrimination. She may succeed in this either directly by persuading the court that a discriminatory reason more likely motivated the employer or indirectly by showing that the employer's proffered explanation is unworthy of credence. See McDonnell-Douglas, 411 U.S., at 804-805." (emphasis in original)
A second criticism that Judge Probst finds relates to the Respondent's burden under the direct evidence analysis. As stated by the Complainant herein, where there is direct evidence of discriminatory intent, the burden shifts to the employer to prove by a preponderance of the evidence that the adverse action would have been taken even in the absence of a discriminatory motive. This burden, sometimes referred to as the "same decision" test was adopted by the U. S. Supreme Court in Mt. Health City School District Board of Education v. Doyle, 429 U.S. 274 (1977 , a case not involving Title VII. Mt. Healthy presented the issue whether the exercise of a constitutionally protected right was the basis for a decision not to hire an untenured teacher. Judge Probst states that "It appears to be totally illogical to suggest that a court can find that the plaintiff was the victim of intentional discrimination which connotes a casual finding and, at the same time, find that the defendant would have taken the same action in the absence of discrimination." (emphasis in original)
Judge Probst found the 8th circuit's decision in Bibbs v. Block, 36 FEP Cases 713 (1984) to be compelling logic on the usefulness of the "same decision" test in analysis of a Title VII matter:
"We find it inherently inconsistent to say that race was a discernible factor in the decision, but the same decision would have been made absent racial considerations. Thus, we think that once race is shown to be a causative factor in the employment decision, it is clearly erroneous to find that racial considerations did not affect the outcome of the decision. The analysis could be reversed to say that once it is shown that the same decision would have been made absent racial considerations, then it is clearly erroneous to find that race was a causative factor in the employment decision." Id. at 716.
Additionally, going beyond Judge Probst's criticisms, our own Supreme Court appears to reject the same decision test . Our Supreme Court takes the position that when one of the motivating factors is a discriminatory reason, no matter how many other valid reasons exist for such conduct, the discriminatory conduct complained of may not be upheld . See State of Wis . Dept . of Employment Relations, supra, and Muskego-Norway, supra. Based upon the above, the Commission has serious doubts about the allocation of burdens as set forth by Complainant where there is direct evidence of discriminatory bias .
In any event, the Commission believes that the evidence cited by Complainant as direct evidence of a discriminatory bias is too insubstantial to constitute direct proof of age discrimination. Imhoff's June 1981 statement that Complainant and Gill were the oldest and next to go provides little probative value in establishing discriminatory intent. Complainant has provided no details of the discussion occurring at the time the statement was made. Standing alone, this represents nothing more than a simple truism. Further, Complainant himself admits that at the July luncheon when Imhoff first mentioned his separation from the company, Imhoff told him that he (Imhoff and the other shareholders) felt he was no longer effective . Also, in view of the fact that Complainant was a long-time business associate and an equal shareholder it's not surprising that Imhoff would have tried to "soften the blow" by couching Complainant's separation in terms of retirement. The Commission finds the following excerpt taken from Imhoff's February 1982 deposition in connection with Gill's lawsuit (apparently not a discrimination claim) against the Respondent as fairly instructive on this point:
"Question. Was there a general consensus formed -- Did you sense a general consensus as far as Jim was concerned that he was lacking effectiveness as manager of the East office?
Answer. General consensus, ,yes, but not consensus as to when Jim ought to go or whatever. And my reason for meeting with Jim and Clem that day was that I did not want to go through a termination vote like we had to do with Ken Disch some years before, and I wanted to try over the next year and a half or two years to resolve a separation with Jim and Clem on some mutually agreeable basis. That was the reason for the meeting. It was a very traumatic experience, I think Jim and Clem will both agree, when Ken Disch was terminated, and I believe they knew the whole board had to vote to terminate somebody." (TR III, p. 113) (emphasis added)
Lastly, Frederick's comment does not support a showing of direct evidence of any discriminatory bias in light of the fact that the acknowledged subject of the July 28 meeting was ineffectiveness.
Additionally, the Complainant has argued that the examiner's finding (#10) that his transfer to the Central office was not a demotion is contrary to all of the credible evidence in the record. However, even assuming that Complainant's transfer did constitute a demotion this issue has become moot in light of the Commission's determination that the transfer was based on legitimate, non-discriminatory business reasons and not Complainant's age.
Based on all the foregoing reasons the Commission hereby affirms the examiner.
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