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Johnson v. Deloitte & Touche, LLP: US District Court : EMPLOYMENT - prima facie age discrimination, but legitimate reasons, no pretext

Civil No. 06-4399(DSD/FLN)
Richard D. Johnson,
Deloitte & Touche, LLP,
James H. Kaster, Esq., David Schleisinger, Esq. and
Nichols, Kaster & Anderson, 80 South Eighth Street, 4600
IDS Center, Minneapolis, MN 55402, counsel for plaintiff.
Lawrence M. Shapiro, Esq. Nancy E. Brasel, Esq. and Green
Espel, 200 South Sixth Street, Suite 1200, Minneapolis,
MN 55402, counsel for defendant.
This matter is before the court upon defendants motion for
summary judgment. Based upon a review of the file, record and
proceedings herein, and for the reasons stated, the court grants
defendants motion.
This age discrimination in employment action arises out of
plaintiff Richard Johnsons (Johnson) termination in January 2002
as part of a reduction in force (RIF) at defendant Deloitte &
Touche, LLP (Deloitte). Johnson began working in Deloittes
1 Senior manager is the highest ranking position before an
employee is considered for promotion to director or admission to
the partnership.
2 Whisler became partner in charge of Minneapolis IHG in June
Minneapolis office in 1990, and was a 56-year-old senior manager1
in the Integrated Health Group (IHG) in January 2002.
At that time, Deloitte divided its professional services into
four primary functions: (1) Tax; (2) Assurance and Advisory
Services; (3) Human Capital; and (4) Solutions. IHG was one of
four groups under Human Capital, which was also broken down
geographically into national, sector, cluster and office levels.
Deloittes Minneapolis and Chicago offices constituted the Midwest
Cluster of the Central Sector, with Human Capital and IHG
maintaining a partner in charge at each geographic level. At the
time of the RIF, the relevant partners in charge were: Len Gray
(Gray) - Central Sector Human Capital; John Stenson (Stenson) -
Central Sector IHG; and Jim Scearcy (Scearcy) - Minneapolis Human
Capital. In addition, Jim Whisler (Whisler) was Johnsons
advisor during 2001.2 (Whisler Dep. at 11.)
Human Capital leaders decided in late 2001 to implement a RIF
in the Central Sector. On November 29, 2001, Gray informed the
partners in charge that Deloitte needed to eliminate fifteen to
eighteen positions within Central Sector Human Capital, with an
estimated thirteen coming from the Midwest Cluster. Gray
instructed the partners to develop a list for the RIF with the
first criteria being employee job performance. Gray further
indicated that:
[W]e need to consider each individuals
potential for long term impact on the practice
and future likelihood of consistent success
with our clients. This would include
consideration of how an individual fits with
our culture and desire for strong team play.
This is a good time to take out lone wolves
who we do not feel will be a good fit for the
long term. Finally, proposal backlog and
current chargeability. If someone is only
partially busy and we dont see our pipeline
filling them up soon, now is the time to move.
We need to identify situations where 4 or 5
people are sharing a workload that supports 3
high performers and make a decision about
which ones we can not afford to keep.
(Brasel Aff. Ex. R.)
In response to Grays instructions, Whisler, Stenson and two
others assembled independent forced rankings of all Minneapolis
IHG employees based upon their performance in relation to other
employees in the same position. The independent rankings were
later consolidated into a single agreed-upon list and were based on
billable hours, sales revenue, managed revenue, long-term
contribution to the practice in terms of development of new
product, new consulting approach, and some subjective measures
about long-term value to the practice. (Stenson Dep. at 27-30.)
3 Scearcy did not participate in the forced rankings but did
help decide who to include in the Minneapolis portion of the RIF.
(Scearcy Dep. at 68.)
4 Within the Central Sector, seven of the eighteen terminated
employees were over forty years old. Within the Minneapolis
office, four of the eight terminated employees were over forty
years old. Within Minneapolis IHG, three of the five terminated
employees were over forty years old. The other two terminated
senior managers were 56 and 43 years old. The ages of the five
remaining senior managers were: 40, 40, 37, 35 and 33.
According to Stenson, Johnson was on everybodys list for
termination.3 (Id. at 31.)
Stenson and the Minneapolis Human Resources leader informed
Johnson early in January 2002 that he was being laid off. After
Johnsons departure, Scearcy, Stenson, Whisler, Dave Thoen and Paul
Stordahl (Stordahl) took over his work. (Scearcy Dep. at 78;
Brasel Aff. Ex. S.) Ultimately, Deloitte eliminated eighteen
Central Sector positions, including eight from the Minneapolis
office. Of those eight, five came from Minneapolis IHG. Three of
those five were senior managers - each of whom was over forty years
Johnson filed a timely charge of age discrimination with the
Equal Employment Opportunity Commission (EEOC). On July 21,
2005, the EEOC found probable cause that Deloitte violated the Age
Discrimination in Employment Act (ADEA) and on August 31, 2006,
issued Johnson a right to sue letter. (Pl. Ex. 14; Compl. 11.)
Johnson initiated this action on November 1, 2006, alleging age
discrimination under the ADEA and the Minnesota Human Rights Act
(MHRA). Deloitte now moves for summary judgment.
I. Summary Judgment Standard
Rule 56(c) of the Federal Rules of Civil Procedure provides
that summary judgment is appropriate if the pleadings,
depositions, answers to interrogatories, and admissions on file,
together with the affidavits, if any, show that there is no genuine
issue as to any material fact and that the moving party is entitled
to a judgment as a matter of law. See Celotex Corp. v. Catrett,
477 U.S. 317, 322 (1986). A fact is material only when its
resolution affects the outcome of the case. Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute is genuine if the
evidence is such that it could cause a reasonable jury to return a
verdict for either party. See id. at 252.
On a motion for summary judgment, all evidence and inferences
are to be viewed in a light most favorable to the nonmoving party.
See id. at 255. The nonmoving party, however, may not rest upon
mere denials or allegations in the pleadings but must set forth
specific facts sufficient to raise a genuine issue for trial. See
Celotex, 477 U.S. at 324. Moreover, if a plaintiff cannot support
each essential element of his claim, summary judgment must be
5 MHRA age discrimination claims are analyzed under the same
framework. See Ramlet v. E.F. Johnson, 507 F.3d 1149, 1152 (8th
granted because a complete failure of proof regarding an essential
element necessarily renders all other facts immaterial. Id. at
II. Age Discrimination
The ADEA prohibits an employer from discharg[ing] any
individual or otherwise discriminat[ing] against any individual
with respect to his compensation, terms, conditions, or privileges
of employment, because of such individuals age. 29 U.S.C.
623(a)(1). A plaintiff may establish discrimination by showing
either disparate treatment or disparate impact. See Smith v. City
of Jackson, 544 U.S. 228, 232 (2005) (disparate impact); Evers v.
Alliant Techsystems, Inc., 241 F.3d 948, 953 (8th Cir. 2001)
(disparate treatment and impact). Where, as here, there is no
evidence of direct discrimination, the court applies the familiar
burden shifting analysis of McDonnell Douglas Corp. v. Green, 411
U.S. 792 (1973). See Ward v. Intl Paper Co., 509 F.3d 457, 460
(8th Cir. 2007). Under this framework, a plaintiff must first
establish a prima facie case of age discrimination. Id. The
burden then shifts to the defendant to offer a legitimate,
nondiscriminatory reason for its conduct. Id. If the defendant
satisfies its burden, the plaintiff must show that the proffered
reason was pretext for unlawful discrimination.5 Id.
Cir. 2007).
6 Johnson also argues that before and after the RIF Deloitte
hired an inordinate number of employees outside of the protective
class and that certain comments by his former supervisor and
Scearcy suggest that age was a factor in his termination. The
court addresses those arguments below as they relate to pretext.
A. Disparate Treatment
1. Prima Facie Case
To establish a prima facie case of disparate treatment where
there has been a RIF, the plaintiff must show: (1) he is over 40
years old; (2) he met the applicable job qualifications; (3) he
suffered an adverse employment action; and (4) there is some
additional evidence that age was a factor in the employers
action. Ward, 509 F.3d at 460 (citation omitted).
In this case, the first three factors are uncontested. With
respect to the fourth factor, Johnson has shown that of the eight
senior managers in the Minneapolis IHG only the three oldest were
included in the RIF and all three were over 40 years old. The
court determines that this evidence alone satisfies the fourth
factor.6 Cf. Chambers v. Metro. Prop. & Cas. Ins. Co., 351 F.3d
848, 856 (8th Cir. 2003) (fourth factor may be established through
statistical evidence).
2. Legitimate Reason
In response to Johnsons prima facie case, Deloitte argues
that the RIF was an economically motivated business decision.
7 Deloitte notes that Johnsons performance would not have led
to his termination absent the RIF.
Deloitte has produced evidence showing that in the fall of 2001
Central Sector Human Capital was behind its business plan and the
Midwest Cluster IHG was behind its budgeted revenue and profit
numbers. Moreover, e-mails from Deloittes management indicate
that the RIF was due to economic necessity.
Deloitte further argues that Johnson was included in the RIF
because of his performance relative to his peers.7 To support its
contention, Deloitte has produced evidence showing that Johnson was
one of the bottom three senior managers in the Minneapolis IHG in
performance ratings in 2000 and 2001 and sales in 2001. (See
Brookman Aff. Exs. A-G; Brasel Aff. Ex. K.) In light of these
legitimate nondiscriminatory reasons, the burden shifts back to
Johnson to show that they are pretext for age discrimination.
3. Pretext
When an employer articulates a nondiscriminatory reason for
an employee's discharge ... the factual inquiry proceeds to a new
level of specificity." Dammen v. UniMed Med. Ctr., 236 F.3d 978,
981 (8th Cir. 2001) (quoting U.S. Postal Serv. Bd. of Governors v.
Aikens, 460 U.S. 711, 715 (1983)). In other words, the question
is much more focused: Has the plaintiff shown that the explanation
extracted from the defendant by virtue of a prima facie case is a
pretext for discrimination? Hutson v. McDonnell Douglas Corp., 63
F.3d 771, 779 (8th Cir. 1995). Johnson contends that Deloittes
explanations for both the RIF and his inclusion in the RIF are
Johnson first argues that the RIF was unnecessary and
pretextual because: (1) Deloitte could have achieved a similar
result by placing a moratorium on hiring; (2) Deloitte hired
several employees before and after the RIF; (3) six months after
the RIF Deloitte gave profit sharing bonuses to staff in the
Minneapolis IHG; and (4) an internal e-mail indicated that the RIF
was potentially deeper than necessary. (Brasel Aff. Ex. R.) The
court, however, does not sit as a super-personnel department to
second guess the wisdom of a businesss personnel decisions.
Evers, 241 F.3d at 957. Rather, when a company exercises its
business judgment in deciding to reduce its work force, it need
not provide evidence of financial distress to make it a
legitimate RIF. Regel v. K-Mart Corp., 190 F.3d 876, 880 (8th
Cir. 1999) (quoting Hardin v. Hussmann Corp., 45 F.3d 262, 265 (8th
Cir. 1995)).
Johnson also maintains that the RIF was pretextual because an
internal Deloitte e-mail discussing the RIF references potential
adverse impact issues. (Brasel Aff. Ex. R.) However, merely
acknowledging concern over possible litigation arising out of the
termination of an age-protected employee .... does not constitute
evidence of discriminatory animus. Bashara v. Black Hills Corp.,
8 Johnson also argues that Deloitte improperly considered an
employees potential long-term value to the practice because this
factor would always weigh against older employees. However, there
is no evidence of the weight the decision-makers gave to this
factor that would allow a reasonable inference that it resulted in
discrimination based on an employees membership in a protected
class. Evers, 241 F.3d at 959. Moreover, employment decisions
motivated by factors other than age (such as retirement
eligibility, salary, or seniority), even when such factors
correlate with age, do not constitute age discrimination. EEOC v.
McDonnell Douglas Corp., 191 F.3d 948, 951 (8th Cir. 1999)
(citations omitted).
26 F.3d 820, 824 (8th Cir. 1994). Therefore, Johnson has not
produced evidence permitting a reasonable inference that the RIF
was pretextual.
Johnson further argues that Deloittes performance-based
justification for including him in the RIF is pretextual for
several reasons. First, Johnson contends that if the alleged
factors had actually been relied upon, he would not have been
included in the RIF.8 Specifically, Johnson maintains that he was
not one of the bottom three Minneapolis IHG senior managers in
managed revenue and billable hours. Johnson further notes that he
was ranked higher than other senior managers in net service
revenue, client service hours and utilization rates. In addition,
Johnson received performance-based bonuses and testified that three
years before his termination Scearcy told him he would be promoted
to a director position. Nevertheless, Johnson acknowledges that he
was ranked last in sales through period ten of Deloittes 2001
9 There are thirteen periods per fiscal year, but the record
only contains evidence through period ten.
10 Johnson challenges the validity of the sales data, arguing
that Deloitte improperly attributed a sale of his to another senior
manager. To support his assertion, Johnson has produced a letter
from a client indicating that the client thought Johnson was the
lead on the sale. (Pl. Ex. 6.) Johnsons assertion, however, is
based upon his own personal belief as to how the sale should have
been allocated, and he has not provided sufficient evidence to
create an issue of fact as to whether the sale was improperly
allocated. Johnson also indicates that Deloitte began taking work
away from him, but he has not produced supporting evidence or shown
that this affected his job performance so that he would otherwise
not have been included in the RIF. Further, Johnson notes that the
sales data does not include Stordahl. Stordahl, a senior manager,
however, only joined Deloitte in April 2001. Moreover, even if
Stordahl had lower sales than Johnson, Johnson would still have
been in the bottom three.
fiscal year,9 and that his performance reviews reflect Deloittes
ongoing concern with his sales performance.10 Moreover, although
Johnson was rated as a Meets Expectations employee in his 2000
and 2001 performance reviews, only one other senior manager had
lower ratings. Thus, even if Johnson is correct that Deloitte
placed greater emphasis on sales and performance evaluations than
the other factors, this is not evidence of discrimination. Rather,
it is evidence that even capable employees are released when an
employer is down-sizing. Hutson, 63 F.3d at 779.
Second, Johnson argues that comments made by his former
supervisor Robert Ingram (Ingram) and Scearcy establish pretext.
Johnson testified that when he first started at Deloitte, Ingram
told him that he was too old to be considered for partnership.
This statement, however, is too remote in time to be indicative of
age discrimination. See Evers, 241 F.3d at 959. In addition,
Johnson testified that on a few occasions in his last years at
Deloitte, Scearcy referred to the floor area where Johnson
maintained his office as the geriatric ward. However, Johnson
also testified that Scearcy was merely trying to be funny. As
such, Scearcys alleged comments are not causally related to
Johnsons termination. See id. Therefore, these stray remarks do
not permit a reasonable inference of discrimination.
Finally, Johnson argues that statistics establish pretext. As
the court noted above, the RIF included the three oldest
Minneapolis IHG senior managers, all of whom were in the protected
class. Although this satisfied Johnsons prima facie case, the
statistics do not permit a reasonable inference that Deloittes
explanation for Johnsons inclusion in the RIF is pretextual.
Compare Taylor v. QHG of Springdale, Inc., 218 F.3d 898, 900 n.2
(8th Cir. 2000) (prima facie case does not always establish
pretext) with Kehoe v. Anheuser-Busch, Inc., 995 F.2d 117, 120 (8th
Cir. 1993) ([E]vidence which is sufficient to make a prima facie
case of age discrimination may also be sufficient to create a jury
question on the issue of pretext. (citations omitted)).
Statistical evidence is probative of pretext only insofar as it
analyze[s] the treatment of comparable employees. Hutson, 63
11 Johnson also submitted evidence indicating that the majority
of employees hired by Deloitte before and after the RIF were
outside of the protected class. (Pl. Ex. 13.) This evidence,
however, contains hiring information for positions ranging from
interns to senior managers. Therefore, because the evidence does
not consider comparable employees, it is not probative of age
discrimination. Likewise, Johnsons observation that few, if any,
Deloitte employees make it to retirement is unsubstantiated
anecdotal evidence that does not permit a reasonable inference of
age discrimination.
F.3d at 777.11 Here, the Minneapolis IHG decision-makers ranked
Minneapolis IHG employees against each other according to peerrelated
performance expectations. Thus, at a minimum, the proper
group for comparison is all employees in the Minneapolis IHG. When
considered in this light, Johnsons claim is weakened because the
other two Minneapolis IHG employees included in the RIF were 22 and
31 years old. Nevertheless, such evidence may at times cause a
reasonable trier of fact to raise an eyebrow. See MacDissi v.
Valmont Indus., Inc., 856 F.2d 1054, 1058 (8th Cir. 1988). Where
there are no other independent direct grounds for disbelieving
Deloittes explanation, however, such limited statistics do not
permit a reasonable inference that Deloittes explanations are
pretext for age discrimination. See id.; see also Hutson, 63 F.3d
at 778. Therefore, Johnson has failed to produce evidence
permitting a reasonable inference that Deloittes proffered
nondiscriminatory reasons for his termination are pretext.
Accordingly, summary judgment is warranted on Johnsons disparate
treatment age discrimination claims.
B. Disparate Impact
Deloitte argues that Johnson did not assert a disparate impact
claim in his EEOC charge or in his complaint. Assuming, however,
that Johnson properly exhausted his administrative remedies and
asserted a disparate impact claim, the facts do not support such a
claim. A prima facie case of age discrimination under a disparate
impact theory requires a plaintiff to identify[] a specific
employment practice and then present[] statistical evidence of a
kind and degree sufficient to show that the practice in question
caused the plaintiff to suffer adverse employment action because of
his or her membership in a protected group. Evers, 241 F.3d at
953 (citing Watson v. Fort Worth Bank & Trust, 487 U.S. 977, 994
Johnson identifies the RIF as the appropriate employment
policy and urges the court to consider statistics limited to the
Minneapolis IHG senior managers. These statistics show that onehundred
percent of the terminated employees were members of the
protected group and that the percentage in the protected group fell
from sixty-three percent (five of eight) before the RIF to forty
percent (two of five) after the RIF. Such statistics, however,
provide little probative value because of the small sample size.
Moreover, the relevant population in a [RIF] situation
consists of workers subject to termination. Smith v. Xerox Corp.,
196 F.3d 358, 368 (2d Cir. 1999). Here, although Deloitte decided
on an office-by-office basis who to include in the RIF, the RIF
applied to the Central Sector Human Capital as a whole and was
guided by the considerations set forth in Grays instructions.
Therefore, the relevant population for analysis in determining
whether Johnsons age was a factor in his termination is Central
Sector Human Capital. Johnson has submitted no evidence related to
the age demographics of the employees in Central Sector Human
Capital that would permit comparison of the effect of the RIF on
protected and nonprotected employees. Cf. id. at 368 (The
questions to be answered are ... what is the composition of the
population subject to the [RIF], what was the retention rate of the
protected group compared to the retention rate of other employees,
and how much of a differential in selection rates ... constitute[s]
a disparate impact.) Therefore, the court determines that Johnson
has not established a prima facie case and grants Deloittes motion
for summary judgment on Johnsons disparate impact claim.
Accordingly, based upon the file, record and proceedings
herein, and for the reasons stated, IT IS HEREBY ORDERED that
defendants motion for summary judgment [Doc. No. 19] is granted.
Dated: June 3, 2008 s/David S. Doty
David S. Doty, Judge
United States District Court


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