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Blum v. Witco Chemical Corp.

argued: February 23, 1987.

JAIME BLUM, BRIJ KAPUR AND JAMES C. SPITSBERGEN, APPELLANTS IN 86-5349
v.
WITCO CHEMICAL CORPORATION, APPELLANT IN 86-5310



On Appeal from the United States District Court for the District of New Jersey, D.C. Civil No. 83-3047.

Author: Becker

Opinion OF THE COURT

BECKER, Circuit Judge.

This appeal and cross appeal arise out of an age discrimination suit brought by three research chemists against their former employer, Witco Chemical Corporation.*fn1 The case was tried to a jury which found for the plaintiffs and awarded them a total of $75,057.05 in lost pension benefits under the ADEA and $15,000 for pain and suffering under the New Jersey common law doctrine of wrongful discharge. Plaintiffs were also awarded $135,977.40 in attorney's fees. Witco's appeal from the district court's denial of a motion for a judgment notwithstanding the verdict raises four issues: 1) whether there was sufficient evidence to support the jury's verdict; 2) whether the plaintiffs were entitled to "front pay" in the form of lost pension benefits under ADEA; 3) whether there exists a cause of action for wrongful discharge based on age discrimination under the New Jersey common law doctrine of wrongful discharge; and 4) whether the award of attorney's fees was excessive. The plaintiffs' cross appeal raises one issue: whether the district court erred by refusing to award liquidated damages under the provisions of the ADEA.

For the reasons that follow, we conclude that there was sufficient evidence to support a finding of age discrimination, and we will uphold the jury's verdict on that issue. Addressing the important issue of pension benefits, we conclude that the policies underlying the ADEA support the award of lost pension benefits as front pay under the facts of this case. We disagree with the district court on the existence of a New Jersey wrongful discharge claim for age discrimination and will set aside the jury award on that issue. As to attorney's fees, despite misgivings on certain items, we do not find an abuse of discretion in the district court's calculation of the lodestar. However, in the wake of the Supreme Court's recent decision in Pennsylvania v. Delaware Valley Citizens' Council for Clean Air, 483 U.S. 711, 55 U.S.L.W. 5113, 97 L. Ed. 2d 585, 107 S. Ct. 3078 (U.S. June 26, 1987) (No. 85-5), we will remand for a recalculation of the 20% risk multiplier employed by the district court. On plaintiffs' cross appeal, we will affirm the district court's order denying to plaintiffs liquidated damages.

I. FACTS AND PROCEDURAL HISTORY

In April of 1983, pursuant to a planned reduction in force, Witco closed its Central Research Division in Oakland, New Jersey. As a result, seventeen employees of the Division were terminated, while sixteen were retained and reassigned to other divisions in the company. Among the terminated employees were three research chemists -- Jaime Blum, Brij Kapur and James Spitsbergen. At the time of termination: Blum was sixty years old (he had been employed by the company for nine years); Kapur was fifty-eight years old (he had been employed by Witco for eighteen years); and Spitsbergen was fifty-seven years old (he had been employed by Witco for fifteen years). All three men have graduate degrees in chemistry.

Following their termination each of the plaintiffs secured new employment at a higher salary. Blum found a job in August of 1983 which paid $5,000 more a year than his position with Witco. Kapur's new position $4,000 more per year. Spitsbergen's new position paid $6,000 more per year. However, both Blum and Spitsbergen's new jobs were out of state, requiring dual residence and causing commuting expenses.

In August, 1983 Blum, Kapur and Spitsbergen brought suit against Witco charging age discrimination as well as various torts based on state law. In June 1985 the case proceeded to trial.

The plaintiffs attempted to prove their allegation of discrimination primarily through the testimony of an expert: labor economist, Mark Killingsworth. Statistical data that he interpreted revealed that chemists at Central Research who were under forty years of age had 100% retention rate, while approximately two-thirds of the chemists over forty were terminated. A second analysis, which used the age of forty-five as the dividing line, also showed a disparate termination for chemists who were over forty-five. Additionally, plaintiffs produced a statistical expert who testified that the probability that the disparate retention rate was due to some random factor unrelated to age was .0084 (approximately 8 in 1000).

Plaintiffs introduced evidence that showed that less than three weeks after Witco terminated them, Witco ran an employment advertisement in the New York Times for a chemist at its Argus Division in Brooklyn, New York. Even though all three plaintiffs were still unemployed, and one even applied for the position, Witco hired a twenty-five year old chemist to fill the vacancy. Blum also testified that at a social gathering in March of 1983, a month before his termination, his supervisor had approached him and remarked, "Gee whiz, Dr. Blum, you are getting feisty at your old age."

To support their damage claims, the plaintiffs offered the testimony of William Troyan, who was qualified as an expert in the valuation of retirement and pension programs. Troyan testified that he had evaluated Witco's plan and, based on interest rates and mortality tables provided by the Pension Benefit Guaranty Corporation, had calculated the difference between the present value of Witco's pension plan to each plaintiff at the time of termination and its value had he remained in Witco's employ until the normal retirement age of 65 years old. He testified that Blum would suffer a decrease in monthly pension benefits having a present value of $19,901.44 as a result of the wrongful discharge; Kapur, $30,677.76; and Spitsbergen, $7,637.85.

As its defense, Witco adduced evidence that the chemists were terminated because their areas of expertise were too specialized to make retention elsewhere in the company feasible. Company witnesses testified that the chemists retained by Witco were kept primarily because of their involvement with a particular project at Witco named Argus. Company officials denied that their termination decisions were based on age.

On the issue of damages, Witco offered the testimony of an assistant to the Director of Human Resources for Witco. He testified that he had reviewed the employment packages of the plaintiffs' new employers, and he opined that they were all better packages than Witco's. However, no testimony was offered to contradict the calculations of plaintiffs' expert concerning the amount by which plaintiffs' claim for lost pension benefits should be decreased as a result of these allegedly better total employment packages.

The jury returned a verdict in favor of the plaintiffs, awarding Blum $19,901.44 in lost pension benefits and $5,000 in damages for pain and mental suffering; Kapur $30,677.76 in lost pension benefits and $5,000 in damages; and Spitsbergen $7,637.85 in lost pension benefits and $5,000 in damages. Initially, the front pay pension claims were to be tried to the court. However, the district court later decided to submit the pension issue to the jury on the state law claims and to use the verdict as advisory on the ADEA pension claims. After trial, the district court adopted the jury verdict, in light of this court's decision in Maxfield v. Sinclair Int'l, 766 F.2d 788 (3d Cir. 1985), cert. denied, 474 U.S. 1057, 106 S. Ct. 796, 88 L. Ed. 2d 773 (1986), that the amount of a front pay award is a jury question. The district court also denied the defendant's post-trial motions for judgment notwithstanding the verdict and for a new trial, and later the granted plaintiffs' motion for attorney's fees, awarding $135,977.40. Witco filed timely appeals from the order denying its motion for judgment n.o.v. and the order awarding attorney fees. The plaintiffs cross appealed. We consider first the issues raised in Witco's appeal.

II. SUFFICIENCY OF EVIDENCE OF AGE DISCRIMINATION

Witco's first argument on appeal is that plaintiffs failed to prove age discrimination.*fn2 Because a jury determined the issue, our scope of review is limited to examining whether there is sufficient evidence to support the verdict, drawing all reasonable inferences in favor of the verdict winner. Massarsky v. General Motors Corp., 706 F.2d 111, 117 (3d Cir.), cert. denied, 464 U.S. 937, 78 L. Ed. 2d 314, 104 S. Ct. 348 (1983).

In order to prevail on their age discrimination claim, plaintiffs had to prove that age was a determinative factor in the defendant's decision to terminate their employment. Duffy v. Wheeling Pittsburgh Steel Corp., 738 F.2d 1393, 1395 (3d Cir. 1984). We have set forth the manner in which the burden of proof devolves in other cases, see Berndt v. Kaiser Aluminum & Chemical Sales, Inc., 789 F.2d 253, 256 (3d Cir. 1986); Chipollini v. Spencer Gifts, Inc., 814 F.2d 893 (3d Cir.) (in banc), petition for cert. filed, 56 U.S.L.W. 3013 (U.S. June 17, 1987) (No. 86-2007), and it need not be repeated here. It is noteworthy however that under Maxfield v. Sinclair Int'l., 766 F.2d 788 (3d Cir. 1986), it is now sufficient to prove more favorable treatment to a "sufficiently younger" person, rather than to a person outside the protected class. Id. at 793.

We find, after a careful review of the record, that there was a sufficient evidence from which the jury could reasonably have concluded that age was a determinative factor in Witco's decision to terminate the plaintiffs. As noted by the district court, plaintiffs' expert "produced convincing statistical evidence that the chance that the plaintiffs were terminated for non-age-related reasons was almost nonexistent." Statistical evidence is an appropriate method for establishing disparate impact as indirect evidence of age discrimination. Leftwich v. Harris-Stowe State College, 702 F.2d 686, 690 (8th Cir. 1983); cf. Massarsky, 706 F.2d at 121 (absent statistical proof, pure conjecture to assume employer's policy had disparate impact on protected class). Plaintiffs also offered evidence that Witco hired a twenty-five year old chemist to fill a vacancy for ...


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