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SPERLING v. HOFFMANN LA ROCHE

April 30, 1996

RICHARD SPERLING, FREDERICK HEMSLEY, and JOSEPH ZELAUSKAS, individually and on behalf of all other persons similarly situated, Plaintiffs,
v.
HOFFMANN-LA ROCHE, INC., a New Jersey corporation, Defendant.



The opinion of the court was delivered by: ACKERMAN

 Ackerman, D.J.

 This is a putative class action brought by former employees of Hoffmann-La Roche, Inc. ("Roche"), alleging violations of the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. § 621 et seq. Now before the court are two motions by Roche. Roche moves (a) for partial summary judgment dismissing the individual disparate treatment claims of sixty plaintiffs, and (b) for an in limine ruling excluding certain evidence. For the reasons detailed below, both of Roche's motions are denied.

 I. Background

 On February 4, 1984, Roche discharged or demoted approximately 1,100 employees pursuant to a reduction in force ("RIF"), known as Operation Turnabout. Based on Roche's conduct during the RIF, Richard Sperling, one of the employees and a named plaintiff in this case, filed an age discrimination charge with the Equal Employment Opportunity Commission ("EEOC") on behalf of himself and all employees similarly situated. Thereafter, on May 7, 1985, Sperling, along with the other named plaintiffs, filed this action on behalf of themselves and all others similarly situated, alleging, among other things, that the defendant discriminated against them in violation of the ADEA. Subsequently, 476 of the over 1,100 employees affected in the RIF opted-in as members of the putative class.

 In October of 1990, after the last consent to join the class action was filed, plaintiffs suggested, in a meeting between the parties with the Honorable Stanley R. Chesler, United States Magistrate, that there should be a trifurcated trial in this action. At the first stage of this trial, the jury would decide classwide issues of disparate treatment or disparate impact; the second stage would consist of individual liability determinations; the third stage would consist of hearing on damages, if necessary. See Zackin Aff. at PP2, 4(a) (attached as exhibit 2 to Appendix of Hoffmann-La Roche Inc. on Appeal from Opinion of Special Master Dated November 28, 1994 Denying Partial Summary Judgment and Related Relief [hereinafter "Roche App."]). In response, Roche's counsel asserted that it would be difficult to fully assess plaintiffs' proposed trial methodology because, among other reasons, plaintiffs had not yet provided the theories on which they intended to base their disparate treatment and disparate impact claims. See id. at P4(b).

 After further discussion, Judge Chesler directed Roche to serve on plaintiffs a set of contention interrogatories, which would ask plaintiffs to identify the theories on which they based their claims of age discrimination. Thereafter, in December of 1990, Roche served the contention interrogatories on the plaintiffs. There were fourteen contention interrogatories. See Flamm Aff. Ex. 2 (attached as Exhibit 3 to Roche App.). Interrogatories 1 through 13 each dealt with a different factor and asked whether plaintiffs contended that that factor was considered by Roche in making the decision to terminate any employee 40 years of age or older. For example, Interrogatory 1 asked: "Do plaintiffs contend that 'relative high salary level due to many periodic incremental increases ' was considered by Roche as a factor in the employment decision made with respect to any employee(s) 40 years of age or older." Id. (emphasis added). Interrogatory 2 asked: "Do plaintiffs contend that 'relative high salary within a particular salary grade level ' was considered by Roche as a factor in the employment decision made with respect to any employee(s) 40 years of age or older." Id. (emphasis added). Interrogatories 3 through 13 asked the same question with respect to 11 other factors. In addition, Interrogatory 14 asked plaintiffs to "identify each additional factor, other than those previously identified, which plaintiffs contend was improperly considered by Roche as a factor in the employment decision made with respect to any employee(s) 40 years of age or older." Id.

 For each of the factors specifically asked about in Interrogatories 1 through 13 and for any additional factor listed by plaintiffs in response to Interrogatory 14, Roche requested that the plaintiffs set forth certain information relating to Roche's alleged consideration of these factors. For example, Roche asked that plaintiffs provide a definition for the factor, set forth all facts that support the contention that Roche considered that factor in terminating members of the class, and identify each person who plaintiffs contend was adversely affected by consideration of the factor.

 After several years, plaintiffs' responses to these interrogatories were completed. The plaintiffs consolidated the 13 factors about which Roche specifically asked into 7 factors. Plaintiffs added two other factors in response to Interrogatory 14. See Flamm Aff. Ex. 4 (attached as Exhibit 3 to Roche App.). Subsequently, plaintiffs added another factor by supplementing their response to Interrogatory 14 in February of 1994. See Zackin Aff. Ex. A (attached as Exhibit 2 to Supplemental Appendix of Hoffmann-La Roche Inc. on Appeal from Opinion of Special Master Dated November 28, 1994 Denying Partial Summary Judgment and Related Relief [hereinafter "Roche Supp. App."]).

 With the exception of the February 1994 supplementation by the plaintiffs, plaintiffs' responses were filed prior to the Supreme Court's decision in Hazen Paper Company v. Biggins, 507 U.S. 604, 113 S. Ct. 1701, 123 L. Ed. 2d 338 (1993). In Hazen Paper, the Supreme Court clarified the standards for liability under the ADEA. As will be discussed infra, after Hazen Paper, actions by employers that were previously held to be violative of the ADEA, see, e.g., White v. Westinghouse Electric Co., 862 F.2d 56, 62 (3d Cir. 1988) (firing of older worker to prevent vesting of pension benefits violates ADEA); Metz v. Transit Mix, Inc., 828 F.2d 1202 (7th Cir. 1987) (firing of older employee to save salary costs resulting from seniority violates ADEA), can no longer provide the basis for an ADEA claim. Hazen Paper, 113 S. Ct. at 1705 ("We now clarify that there is no disparate treatment under the ADEA when the factor motivating the employer is some feature other than the employee's age.").

 Based on Hazen Paper, Roche brought the motions now before the court. Roche asserts that, pursuant to Hazen Paper, eight of the factors relied upon by plaintiffs in the contention interrogatories, and a portion of a ninth factor, are not, as a matter of law, violative of the ADEA. Therefore, Roche has moved for an order dismissing the disparate treatment claims of the sixty plaintiffs who, in answering the contention interrogatories, only listed one or more of the challenged factors as the reasons for their termination. Roche also moves for an in limine ruling prohibiting evidence of these factors from being introduced at the trial of this matter.

 Subsequent to the serving of the contention interrogatories on the plaintiffs, I appointed a special master in this case. *fn1" Therefore, these motions were referred to the Special Master. In an opinion dated November 28, 1994, the he denied both of Roche's motions. See Opinion of Special Master, dated November 28, 1994, at 7, 10-11 [hereinafter "Special Master Opinion"].

 The Special Master held that due to the existence of a pattern-or-practice claim in this case, it would be inappropriate to dismiss the 60 class member's individual disparate treatment while there were still a pattern-or-practice claim in the case. The Special Master reasoned that, because the burden of persuasion on the issue of whether Roche discriminated against any individual plaintiff would shift to Roche if the plaintiffs prevailed in proving a pattern or practice of discrimination, it would be inappropriate to rule on a summary judgment motion with respect to any of the individual claims until it was determined who would have the burden of persuasion on this issue. See Special Master Opinion at 7-10. The Special Master also denied as premature Roche's motion for an in limine ruling on the challenged factors. See Special Master Opinion at 10-11.

 On March 30, 1995, oral argument was heard on Roche's appeal from this decision. However, given the Special Master's conclusion that Roche's motion must be denied due to the existence of a pattern-or-practice claim in this case and also given that the issue of whether as a matter of law there is a pattern-or-practice claim in this case was before the court in the form of Roche's appeal from the Special Master's denial of its summary judgment motion on plaintiffs' pattern-or-practice claim, I refrained from deciding the Hazen Paper motion until the pattern-or-practice issues were resolved. In an opinion issued today, April 29, 1996, I granted Roche's motion for summary judgment on plaintiffs' pattern-or-practice claim.

 Therefore, now is the proper time to address Roche's motion based on Hazen Paper. In addition, given that there is no longer a pattern-or-practice claim in this case due to the granting of Roche's motion for summary judgment on that claim, the Special Master's reasoning is moot. Therefore, I will now turn to the substance of Roche's motions (a) for partial summary judgment dismissing the individual disparate treatment claims of sixty plaintiffs, and (b) for an in limine ruling excluding certain evidence.

 II. Discussion

 First I will address Roche's motion for judgment on the individual claims of the sixty plaintiffs. Then I will discuss Roche's motion for an in limine ruling.

 A. The Individual Claims

 Roche argues that the individual disparate treatment claims of sixty plaintiffs must be dismissed because the allegations on which they base their claims of age discrimination, as embodied in their answers to the contention interrogatories, do not state claims of age discrimination after Hazen Paper.

 More specifically, as stated above, plaintiffs' answers to the contention interrogatories identified nine factors which Roche allegedly considered in determining who would be fired in Operation Turnabout. Those factors are:

 
(1) Relatively high salary and/or relatively high salary grade;
 
(2) Replaced by younger person;
 
(3) Ample retirement benefits;
 
(4) Age-related disability;
 
(5) Proximity to voluntary retirement;
 
(6) Perceived as less productive and/or less creative;
 
(7) Perceived as having limited skills and/or ability to acquire skills;
 
(8) Perceived as over-qualified or over-experienced; and
 
(9) Perceived as no longer fitting into the organization.

 See Flamm Aff. Ex. 4 (attached as Exhibit 3 to Roche App.). In addition, in February 1994, plaintiffs supplemented their response to Interrogatory 14 to include the allegation that Roche improperly considered the following factor when deciding to terminate all plaintiffs: "Hoffmann-La Roche Inc.'s policy and practice of basing Operation Turnabout termination decisions on subjective criteria applied by line managers and supervisors." Zackin Aff. Ex. A (attached as Exhibit 2 to Roche Supp. App.).

 Roche is not challenging factor 2 -- replaced by a younger person. In addition, in defining factor nine, plaintiffs provided three alternative definitions for "perceived as no longer fitting into the organization." Roche is not challenging two of the three definitions. Roche argues that, after Hazen Paper, the remaining factors (i.e., factors one, three through eight, a portion of factor nine, and the February 1994 supplemental factor) are not valid bases on which to bring an individual, disparate treatment ADEA claim, and therefore, the plaintiffs who solely allege that they were terminated based on these factors have failed to state a claim of age discrimination. For example, Roche argues that Hazen Paper teaches that firing someone because he has a high salary does not violate the ADEA. Therefore, according to Roche, if a plaintiff claimed, via the contention interrogatories, that the only "improper" factor that Roche considered in firing him was his high salary (i.e., factor 1), then that plaintiff's claim must be dismissed because, even if that plaintiff proved that Roche fired him because of his high salary, it did not violate the ADEA. In other words, Roche argues that if a plaintiff only alleges that he was fired because he had a high salary, then that plaintiff has failed to state a cause of action for which relief can be granted under the ADEA.

 In response to Roche's motion, plaintiffs argue, among other things, that the theories of age discrimination that are set forth in their contention interrogatories survive Hazen Paper. In addition, plaintiffs assert that, even if the factors on which the sixty plaintiffs rely are not viable after Hazen Paper, they are not precluded by their answers to the contention interrogatories from raising an additional theory of discrimination that is consistent with Hazen Paper.

 Thus, in deciding this motion two issues must be addressed. First, it must be determined whether any of the factors that plaintiffs listed in their answers to the contention interrogatories no longer amount to a cause of action under the ADEA after Hazen Paper. Second, assuming one or more of the factors on which the plaintiffs rely are no longer viable causes of action under the ADEA, it must be determined whether the individual claims of the plaintiffs who only rely on the invalid factors must be dismissed.

 Before addressing these issues, it should be noted that, although Roche denominated its motion as one for summary judgment, Roche is, in effect, moving to dismiss the claims of these plaintiffs for failure to state a cause of action under the ADEA. In other words, Roche is arguing that these sixty plaintiffs' have failed to state a cause of action in their contention interrogatories. In fact, Roche has admitted as much. See, e.g., Transcript of Oral Argument, dated March 30, 1995, at 13 (statement by Roche's counsel that "essentially, this is the equivalence of a motion to dismiss that we had to bring"). Thus, when addressing Roche's arguments I will use the standard applicable to a motion to dismiss brought pursuant to Federal Rule of Civil Procedure 12(b)(6). Therefore, when reviewing the plaintiffs' contentions, I will accept the contentions as true, "view[] them liberally giving plaintiffs the benefit of all inferences which may be drawn therefrom," and determine whether "it appears beyond doubt that the plaintiff[s] can prove no set of facts in support of [their] claim which would entitle [them] to relief." Wisniewski v. Johns-Manville Corp., 759 F.2d 271, 273 (3d Cir. 1985) (quoting Bogosian v. Gulf Oil Corp., 561 F.2d 434, 444 (3d Cir. 1977), cert. denied, 434 U.S. 1086, 55 L. Ed. 2d 791, 98 S. Ct. 1280 (1978)) (cited in Dykes v. Southeastern Pennsylvania Transportation Authority, 68 F.3d 1564, 1566 n.1 (3d Cir. 1995), cert. denied, 116 S. Ct. 1434, 64 U.S.L.W. 3690 (U.S. April 15, 1996)).

 1. Plaintiffs' Contentions and Hazen Paper

 Before addressing whether plaintiffs' contentions are viable, I will discuss the Supreme Court's Hazen Paper decision. Hazen Paper: The ADEA provides, in part, that "it shall be unlawful for an employer . . . to discharge any individual . . . because of his age." 29 U.S.C. § 623(a)(1). Pursuant to this section of the ADEA, Walter Biggins brought an age discrimination claim against his employer, Hazen Paper Company. Biggins, who was hired at the age of 52, was fired at the age of 62, which was only a few weeks before his pension rights would have vested on the basis of his ten years of service to the company. Biggins v. Hazen Paper Co., 953 F.2d 1405, 1411 (1st Cir. 1992), aff'd in part and vacated in part, 507 U.S. 604, 113 S. Ct. 1701, 123 L. Ed. 2d 338 (1993). Hazen Paper contended that it terminated Biggins because he had started a competing business. When the company required Biggins to sign a confidentiality agreement which would restrict his outside business activities, Biggins refused and was terminated. Id. The jury found that Hazen Paper had violated the ADEA, and this finding was affirmed by the United States Court of Appeals for the First Circuit. Id. at 1412.

 The Supreme Court summarized the First Circuit's reasoning as follows:

 
In affirming the judgments of liability, the Court of Appeals relied heavily on the evidence that [Hazen Paper] had fired [Biggins] in order to prevent his pension benefits from vesting. That evidence, as construed most favorably to [Biggins] by the court, showed that the Hazen Paper pension plan had a 10-year vesting period and that [Biggins] would have reached the 10 year mark had he worked "a few more weeks" after being fired . . . . There was also testimony that [Hazen Paper] had offered to retain [Biggins] as consultant to Hazen Paper, in which capacity, he would not have been entitled to receive pension benefits . . . . The Court of Appeals found this evidence of pension interference to be sufficient for ERISA liability . . . and also gave it considerable emphasis in upholding ADEA liability. After summarizing all the testimony tending to show age discrimination, the court stated:
 
"Based on the foregoing evidence, the jury could reasonably have found that Thomas Hazen decided to fire [Biggins] before his pension rights vested and used the confidentiality agreement [that Hazen Paper asked Biggins to sign] as a means to that end. The jury could also have reasonably found that age was inextricably intertwined with the decision to fire Biggins. If it were not for Biggins' age, sixty-two, his pension rights would not have been within a hairsbreadth of vesting. Biggins was fifty-two years old when he was hired; his pension rights vested in ten years."

 Hazen Paper, 113 S. Ct. at 1704-05.

 The Supreme Court rejected the First Circuit's reasoning and "clarified that there is no disparate treatment under the ADEA when the factor motivating the employer is some feature other than the employee's age." Id. at 1705. In other words, under the ADEA, "a disparate treatment claim cannot succeed unless the employee's [age] actually played a role in [the employer's decisionmaking] process and had a determinative influence on the outcome." Id. at 1706. See also Miller v. Cigna Corporation, 47 F.3d 586, 595 (3d Cir. 1995) (holding that plaintiff in an ADEA case "has the burden of persuading the trier of fact by a preponderance of the evidence that there is a 'but-for' causal connection between the plaintiff's age and the employer's adverse action").

 
Disparate treatment, thus defined, captures the essence of what Congress sought to prohibit in the ADEA. It is the very essence of age discrimination for an older employee to be fired because the employer believes that productivity and competence decline with old age. . . Congress' promulgation of the ADEA was prompted by its concern that older workers were being deprived of employment on the basis of inaccurate and stigmatizing stereotypes.

 Hazen Paper, 113 S. Ct. at 1706 (citations omitted).

 In rejecting the First Circuit's reasoning, the Supreme Court emphasized that when an employer's decision is entirely motivated by factors other than age, the problem of inaccurate and stigmatizing stereotypes is not present. See id. This is the case even where the motivating factor is correlated with age. For example, pension status is typically correlated with age. However, if an employer, like Hazen Paper, fires an employee solely because the employee's pension is about to vest, the employer does not violate the ADEA, even if older employees are more likely to be close to having their pensions vest than younger employees. See id. at 1706-07. This is because

 
the prohibited stereotype ("Older employees are likely to be ") would not have figured in this decision, and the attendant stigma would not be the result of an inaccurate and denigrating generalization about age, but would rather represent an accurate ...

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