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[W] Keller v. Orix Credit Alliance

February 3, 1997

FREDERICK F. KELLER APPELLANT,

v.

ORIX CREDIT ALLIANCE, INC. APPELLEE.



APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY D.C. Civil No. 93-cv-03466

BEFORE: MANSMANN, ALITO and LEWIS, Circuit Judges.

LEWIS, Circuit Judge.

OPINION WITHDRAWN

FREDERICK F. KELLER APPELLANT,

v.

ORIX CREDIT ALLIANCE, INC. APPELLEE.

APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY D.C. Civil No. 93-cv-03466

BEFORE: MANSMANN, ALITO and LEWIS, Circuit Judges.

LEWIS, Circuit Judge.

ARGUED MARCH 6, 1996

Filed February 3, 1997

OPINION OF THE COURT

In this age discrimination case, Frederick F. Keller appeals from the district court's grant of summary judgment in favor of his former employer, ORIX Credit Alliance, Inc. Keller alleges that Credit Alliance violated the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. Section(s) 621 et seq., and the New Jersey Law Against Discrimination ("NJLAD"), N.J.S.A. 10:5-1 et seq., by failing to promote him to the position of Chief Operating Officer, and then terminating his employment. Keller makes three principal arguments: first, that summary judgment was inappropriate because there was sufficient direct evidence of discrimination to create a material issue of fact as to the legitimacy of his discharge; second, that the district court required Keller to establish an impermissibly burdensome prima facie case under the McDonnell Douglas-Burdine line of authority; and finally, that the indirect evidence of discrimination, combined with evidence of pretext in Credit Alliance's proffered reason for his discharge, created a material issue of fact.

For the reasons set forth below, we will reverse the district court's grant of summary judgment.

I.

Credit Alliance is a commercial finance company that lends money to its customers for the lease or purchase of capital equipment. Credit Alliance profits by borrowing money at one interest rate, and lending it to its customers at a higher rate. As of September, 1989, Frederick Keller was an Executive Vice President and Director of Credit Alliance. His primary responsibility was to raise the funds that Credit Alliance intended to lend to its customers. Keller became responsible for raising capital when Credit Alliance was sold in September of 1989 by First Interstate Bancorp to the ORIX Group. When Credit Alliance was owned by First Interstate, First Interstate provided most of Credit Alliance's capital needs. When ORIX acquired Credit Alliance, however, it established a goal for Credit Alliance to develop as quickly as possible its own "credit facilities" in order to become financially independent from ORIX. In the interim, ORIX arranged to have First Interstate continue to provide working capital until Credit Alliance achieved financial independence.

Keller was responsible for spearheading the effort to acquire sufficient funding to achieve Credit Alliance's goal of financial independence. Before the ORIX acquisition, Keller estimated that it would require $1.5 billion to achieve financial independence from First Interstate, and that this was an attainable goal. Credit Alliance apparently adopted this figure and used it to critique Keller's performance based on his relative progress toward this figure.

For reasons contested by both parties, Keller never reached this goal. The most credit Keller was ever able to acquire for Credit Alliance was $785 million as of September, 1991. By September 1992, however, the credit available to Credit Alliance was reduced to $695 million because four of the seven lines of credit arranged by Keller were terminated. Credit Alliance contends that the reason Keller never reached his credit goal was because he was unreceptive to creative fundraising tools, lacked the initiative to pursue financing routes around the country, and lacked the diplomatic skills to negotiate with Japanese bankers. Keller argues that the economic recession, as well as many sources' unwillingness to lend to Japanese-owned firms because of the downturn in the Japanese economy, were the true reasons for his inability to reach the funding goal. Additionally, he points out that his job was to obtain financing on the most favorable terms, and that because of the recession, the financing provided by First Interstate was the most favorable.

In April of 1992, Daniel Ryan, Credit Alliance's Chief Executive Officer, met with Keller to discuss the financing effort. Ryan complained that he had not observed Keller traveling to develop relationships with bankers, and then allegedly stated, "If you are getting too old for the job, maybe you should hire one or two young bankers." Ryan admits saying "maybe you should hire one or two young bankers," but he denies saying "if you are getting too old for the job." Keller documented the contents of this meeting in his journal, including the statement Ryan admits making, but the "if you are getting too old" part is not recorded in the journal.

According to Credit Alliance, Ryan and many members of the Board of Directors overseeing Credit Alliance became increasingly concerned about the progress being made toward financial independence. The parties dispute where these people placed the blame for the failure: Credit Alliance contends that on many occasions it warned Keller that his performance was unacceptable; in contrast, Keller maintains that while some board members expressed their concern as to the progress being made, they ultimately accepted Keller's assessment that the state of the economy made it impossible for him to secure financing on favorable terms.

In May of 1992, Ryan promoted Philip Cooper, age 43, to the position of Chief Operating Officer. In the 18 months before his promotion, Cooper had taken responsibility for a transaction resulting in a four million dollar loss to Credit Alliance, and his region had higher "past due" statistics than comparable regions. Despite the fact that Keller had expressed an interest in the position, Ryan did not consider Keller for Chief Operating Officer. According to Ryan, he was looking for someone with "line experience," and Keller was simply not qualified for the position.

In September of 1992, Ryan decided to terminate Keller. Ryan hired an executive search firm to find candidates for Keller's position. Among the criteria listed by the defendant in a potential candidate were "experience in implementing asset-backed securitization programs and other creative forms of fund raising, strong skills in working with rating agencies and bankers, particularly Japanese bankers, and be result-driven." In April of 1993, Ryan officially terminated Keller. He offered Keller's failure to raise adequate financing and the resulting displeasure of the Board of Directors and other ORIX officers as the reason for Keller's termination.

At or shortly after the termination meeting, Keller, while negotiating the amount of his severance pay, asked Ryan if the reason for his dismissal was his age, and reminded Ryan of the alleged age comment. Ryan then replied that Keller should "do what he had to," because he had checked with their lawyer and been assured that they would have no problem with an age discrimination claim, but that he (the lawyer) could be wrong because he was just a lawyer.

Ryan hired Joseph McDevitt, age 46, to replace Keller. Within a year, McDevitt exceeded the $1.5 billion goal. The parties' briefs do not disclose whether or not the terms of the financing obtained by McDevitt were significantly more favorable than from First Interstate.

Keller subsequently brought suit against ORIX in federal district court alleging age discrimination under the ADEA and the NJLAD, for failing to promote him to the position of Chief Operating Officer a year prior to his dismissal, and for terminating him in 1993. In ruling on Credit Alliance's motion for summary judgment, the district court found that Keller had not established a prima facie case. According to the district court, the age difference between Keller and his replacement was not sufficient to establish that he was replaced by someone significantly younger, and because the undisputed evidence demonstrates that Keller did not reach the financing goal, he was not qualified for the position. Keller v. Orix, No. 93-3466, slip op. at 8-9 (D.N.J. April 6, 1995). In the alternative, the court concluded that even if Keller had established a prima facie case, he did not establish that the legitimate business reason proffered by Credit Alliance was a mere pretext for discrimination. The court stated that:

Keller's failure to make adequate progress towards the $1.5 billion independent financing goal is a legitimate business reason for his termination. . . . Keller's claim that it was impossible to raise sufficient funds is not persuasive in his attempt to prove that Credit Alliance's proffered reason for termination was merely pretext for discrimination. Id. at 10.

The district court, therefore, granted Credit Alliance's motion for summary judgment as to Keller's federal claims, and dismissed the pendant state law claim. This appeal followed.

II.

The district court had jurisdiction pursuant to 29 U.S.C. 626(c) and 28 U.S.C. Section(s) 1367. We have jurisdiction over the appeal pursuant to 28 U.S.C. Section(s) 1291. Our review of a district court's grant of summary judgment is plenary, and we are required to apply the same test the district court should have utilized initially. Chipollini v. Spencer Gifts, Inc., 814 F.2d 893, 896 (3d Cir. 1987) (in banc). In a discrimination case, we must determine whether there is sufficient evidence to create a genuine issue as to whether the employer intentionally discriminated. Weldon v. Kraft, 896 F.2d 793, 797 (3d Cir. 1990). For a defendant-employer to succeed, it must show that "the plaintiff will be unable to introduce either direct evidence of a purpose to discriminate or indirect evidence by showing that the proffered reason is subject to factual dispute." Id. (quoting Hankins v. Temple University, 829 F.2d 437, 440 (3d Cir. 1987)). We, of course, must examine the record in the light most favorable to the party opposing summary judgment, and resolve all reasonable inferences in his or her favor. Matsushita Electric Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 330 n.2 (1986) ("[a]ny doubt as to the existence of a genuine issue for trial should be resolved against the moving party."); 10A Wright & Miller, Federal Practice & Procedure Section(s) 2727 at 124-24 ("Because the burden is on the movant, the evidence presented to the court always is construed in favor of the party opposing the motion and he is given the benefit of all favorable inferences that can be drawn from it."). "This standard is applied with added rigor in employment discrimination cases, where intent and credibility are crucial issues." Robinson v. PPG Indus. Inc., 23 F.3d 1159, 1162 (7th Cir. 1994).

III.

The Age Discrimination in Employment Act makes it unlawful to "discharge any individual or otherwise discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's age." 29 U.S.C. Section(s) 623(a)(1). Like other employment discrimination claims, claims under the ADEA can be established either by the presentation of direct evidence of discrimination under Price Waterhouse v. Hopkins, 490 U.S. 228 (1989), or from evidence which creates an inference of discrimination under the framework of McDonnell Douglas-Burdine. Keller argues that there is sufficient evidence in this case to withstand a motion for summary judgment under either approach. *fn1

A. Mixed Motive under Price Waterhouse.

When an employee shows "by direct evidence that an illegitimate criterion was a substantial factor in the [employment] decision," Price Waterhouse v. Hopkins, 490 U.S. 228, 276 (1989) (O'Connor, J. concurring), the burden of persuasion shifts to the employer to show that even if discrimination was a motivating factor in the discharge, it would have made the same decision absent the discriminatory animus. Id. at 244-46; Armbruster v. Unisys ...


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