David W. Larrison, for appellants.
Michael K. Swirsky, for respondent State Division.
BELLACOSA, J.:
The State Division
of Human Rights found former employer Laverack & Haines, Inc., guilty
of age discrimination based on its elimination of employee George Burns'
job. The Appellate Division essentially upheld the SDHR age discrimination
determination. One Justice dissented and would have granted the petition
to annul the agency's ruling, and this Court granted leave to appeal.
We now reverse
and grant the petition because, while the threshold prima facie case of
discrimination was satisfied, the petitioners-appellants (the employer)
met their burden of rebuttal by presenting a nondiscriminatory, nonpretextual
explanation for the termination of employee-complainant Burns. The
overall employment downsizing was the result of business setbacks.
The elimination of his job and job title reflected no disparate treatment
with respect to the handling of comparable job titles in the Buffalo and
Syracuse offices. In sum, the employer was under no legal obligation
to create a new or additional job for the fired employee or to bump or
displace other employees to make room for him.
Laverack &
Haines, Inc., was a company engaged in the representation of self-insured
employers in matters before the New York State Workers' Compensation Board.
In January 1978, it hired complainant, George Burns, as the Claims Manager
of its Syracuse, New York, office. By 1982, Laverack started downsizing
its operations throughout the State based on severe economic downturns
in its business. It sold off several components of its business and
terminated several senior level employees. The reorganization eliminated
the equivalent Claims Manager position in the company's Buffalo office;
the person previously holding the position, Casimir Wilbert, was dropped
down to and retained as a Hearing Representative. In January 1983,
continuing its reorganization struggle, Laverack transferred Jack Syracuse
(age: early 30s), as a Hearing Representative in the Buffalo office, to
assist Burns (age:
early 60s), who was still the Claims Manager in the Syracuse office.
Thereafter, in late April or early May 1983, Laverack eliminated the position
of Claims Manager throughout its branch
offices. Burns' job title was included in this sweep and he was
entirely phased out as of July 1983. At the time Burns' job as Claims
Manager ended, Laverack offered him a part-time Hearing Representative
position on a consultant, low-paying basis. Burns declined.
Laverack offered a similar arrangement to its Albany Claims Manager, who
accepted the re-adjustment. In April 1985, Jack Syracuse's employment
as Hearing Representative in the Syracuse office was also terminated and
his position was not refilled. Laverack itself was sold in 1987 and
it went entirely out of business in 1989.
In October 1983,
Burns filed a discrimination complaint alleging that Laverack improperly
ended his employment on the basis of his mid-60s age level, in violation
of the Human Rights Law, Executive Law 296[1][a]. Close to ten
years later in 1992, a SDHR Administrative Law Judge issued an opinion,
decision and order with recommended findings of fact. The ALJ stated
that Laverack had improperly terminated Burns' employment on the basis
of age. The ALJ added that the record indicated that Laverack could
have offered employee Syracuse's position as Hearing Representative to
Burns. Within two weeks, Laverack filed objections to the ALJ's findings
with the Commissioner of the SDHR. Six months later, the
Adjudication Counsel for the SDHR presented an alternative proposed
order for the Commissioner's consideration. It recommended that the
ALJ's decision be rejected and the complaint dismissed. Burns filed
pro se objections to the alternative proposed order.
Eight months
later in August 1994, the SDHR Commissioner, opting for the report of the
ALJ, found that Laverack unlawfully discriminated against Burns by terminating
him from employment because of his age, in violation of Executive Law
296[1][a]. The Commissioner determined that Burns had made out a
prima facie case of age discrimination, by establishing that while Laverack
terminated him, it maintained a younger and less experienced individual
in what was characterized as essentially the same position. The Commissioner,
however, modified the remedial recommendations made by the ALJ. The
final determination reduced the back pay awarded to Burns to $27,378,
plus interest assessed from the date of unlawful termination until date
of payment at 9% per annum. The award to Burns of $25,000 in compensatory
damages for mental anguish was sustained. Furthermore, the Commissioner
directed Laverack to pay Burns any pension benefits to which he would
have become entitled had he remained in Laverack's employ for another
year and a half until April 12, 1985, also with interest at 9% per annum.
Burns would have been 65 and entitled to a vested pension at that point
except for his termination in 1983.
The Appellate
Division unanimously agreed that a prima facie case of age discrimination
was established and that Laverack unlawfully terminated Burns. So
do we. The Appellate Division majority, however, further concluded
that the SDHR properly rejected employer Laverack's proffered nondiscriminatory
reasons (its failing business) for the termination. That is the issue
that divided the Appellate Division and it is in that respect that we reverse,
essentially agreeing with Justice Balio's dissent. In view of our
disposition granting the petition to annul the SDHR determination itself,
we need not address the remedial damage aspects of the case.
We are satisfied
that the record in this case establishes that the employer rebutted the
prima facie case of age discrimination with nondiscriminatory, nonpretextual
reasons for
the termination. The downsizing of a company's employment rolls,
due to business failings and economic setbacks, constitutes a sustainable
rebuttal and explanation for the decision to terminate a particular employee,
when demonstrated virtually without contradiction, as in this case and
record.
This Court,
in Matter of Miller Brewing Co. v State Div. of Human Rights (66 NY2d 937),
established the burdens of persuasion and production in an age discrimination
controversy. The Court concluded that satisfaction of the threshold prima
facie component of an age discrimination case shifts the burden to employers
"to rebut the presumption of discrimination by clearly setting forth, through
the introduction of admissible evidence, legitimate, independent, and nondiscriminatory
reasons to support its employment decision" (id., at 938). To satisfy
this burden, the Appellate Division in Manning v Norton Co. (189 AD2d 971),
harkening to Matter of Miller Brewing Co. (supra), stated that "[a] reduction
in work force due to economic conditions has been recognized as a legitimate,
independent and nondiscriminatory reason for an employment decision" (Manning
v Norton Co., supra, at 972 [citations omitted]). Applying the principles
and guideposts provided by Matter of Miller Brewing Co. (supra) and Manning
v Norton Co. (supra), the Appellate Division in Kipper v Doron Precision
Systems, Inc. (194 AD2d 855), held that an employer was not guilty of discrimination
when it fired an employee pursuant to a company decision to terminate one
person with a particular job title. The Court stated that "[p]laintiff's
evidence that some tasks which he could have performed were assigned to
younger employees after he was terminated is insufficient" to establish
that the defendant's proffered reasons were merely a pretext for age discrimination
(id., at 856).
That ruling
and the precedents it relies on offer a cogent parallel in this Laverack-Burns
controversy. Moreover, support for Laverack's satisfaction of its
burdens of persuasion
and production necessary to establish a nondiscriminatory explanation
for a disputed employment decision may be discerned from decisions of the
United States Supreme Court (see, McDonnell Douglas Corp. v Green, 411
US 792; Texas Dept of Community Affairs v Burdine, 450 US 248; St. Mary's
Honor Ctr. v Hicks, 509 US 502).
Notably, this
Court has also held that the discharge of employees as a result of a city
fiscal crisis does not constitute a discriminatory act (see, Steele v Board
of Educ., 40 NY2d 456; Matter of Blyn v Bartlett, 39 NY2d 349). Also,
in Matter of Cuny- Hostos Community Coll. v State Human Rights Appeal Bd.
(59 NY2d 69), where the claimant alleged that he was discharged unlawfully
due to his creed and national origin, this Court upheld the discharge effected
under a 1976 employment reorganizational plan (id., at 72).
In the present
case, Burns argues, and the Appellate Division majority agreed, that Laverack's
proffered nondiscriminatory reason for the termination was insufficient
to
rebut complainant's prima facie case of age discrimination. We
conclude that the state of this record and the proof in relation to the
guiding precedents discussed above do not support Burns' and the SDHR's
argument and the ruling at the Appellate Division.
No one really
disputes that Laverack's business distress led to the elimination of Burns'
job, among many others, and his job category entirely in all the branch
offices. Most
significantly, he was not replaced by a younger employee or by anyone
at all. The Claims Manager position was removed from the roster of
Laverack's employment slots. Employee Syracuse merely assumed, for
a period of time until his own job was also eliminated, some of Burns'
duties. Thus, this arrangement does not constitute an equivalency
to the former position. In any event, as the Kipper (supra) court
correctly noted, the fact that some of Burns' responsibilities were assumed
by a younger employee is insufficient to establish that Laverack's proffered
reason for terminating complainant's employment was pretextual. The
failing company was not "playing musical chairs," as rhetorically argued
by counsel for SDHR. It was struggling to save its failing business.
Burns also contends
that his particular complaint rests on disparate treatment. He argues
that Laverack, by not extending to him an option of employment in a lesser
title, as it offered to the younger Casimir Wilbert, the former Claims
Manager of the Buffalo office, denied Burns equal terms, privileges and
conditions of employment in his Syracuse office setting. This contention
is not sustainable. First, this is not a case of disparate treatment
of employees in the Buffalo and Syracuse offices, because there never was
a lower job vacancy in the Syracuse office where Burns worked, as there
was in the Buffalo office. The two branch office operations were
legally discrete for purposes of the job rearrangements and comparisons
presented here. Second, as the Appellate Division dissent correctly
noted, Laverack was under no legal obligation to create a new or additional
job or to bump or displace lower classified employees as a way to forestall
or obviate an unlawful age discrimination complaint. These maneuvers
might well have backfired with different discriminatory twists, resulting
in a Hobson's choice for the employer.
In sum, appellant
employer Laverack rebutted the SDHR- complainant Burns' case with a nondiscriminatory,
nonpretextual reason for ending Burns' employment after eliminating his
entire job classification in all its branch offices. Laverack had
no duty to retain Burns at the expense of another employee by bumping measures
or at its own expense by creating a new job slot (a self-evident contradiction,
since it could not afford to do so with its business failing as it was).
Accordingly,
the order of the Appellate Division should be reversed, with costs, and
the determination of the New York State Division of Human Rights should
be annulled.
* * * * *
* * * * * *
* * * * * *
Order reversed, with costs, petition granted, respondent State Division of Human Rights' determination annulled and complaint before the Division dismissed. Opinion by Judge Bellacosa. Chief Judge Kaye and Judges Simons, Titone, Smith, Levine and Ciparick concur.
Decided October 15, 1996