Summary: Defendants moved for summary judgment on all of plaintiff’s claims. The court granted defendants’ motion on all claims, except as to plaintiff’s claim for employee benefits. Plaintiff’s claims for discrimination failed because plaintiff could not overcome defendants’ legitimate reason for terminating plaintiff.

Case Name: Michael Thyberg v. Melroe Company

Case Number: A1-00-01

Docket Number: 45

Date Filed: 6/27/01

Nature of Suit: 442

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NORTH DAKOTA

NORTHWESTERN DIVISION

MEMORANDUM AND ORDER

            Plaintiff commenced this action seeking damages for age discrimination. Defendants’ motion for summary judgment is before the court (Doc. #27). For the reasons articulated below, the undersigned magistrate judge orders that defendants’ motion be granted in part and denied in part.

I. Background

            Plaintiff Michael Thyberg was hired by Defendant Melroe Company (“Melroe”) as a temporary design engineer in April 1990. His contract with Melroe expired in October 1990, but he continued to work for Melroe as a temporary design engineer in its “Spra-Coupe” division for the next eight and a half years. In July 1998, Melroe sold its Spra-Coupe division and informed employees in that division their employment would terminate at the end of September 1998.

            Plaintiff was terminated along with seven other full time engineers on September 30, 1998. He was 56 years old. He filed a complaint with the North Dakota Department of Labor on May 25, 1999, claiming that defendant had violated the North Dakota Human Rights Act and the Age Discrimination in Employment Act. Thyberg filed suit against defendants in state court in December 1999, claiming that he was wrongfully terminated without proper notice. Thyberg made no specific reference to any state or federal law in his complaint, but in answers to defendants’ interrogatories, he identified six laws he believed defendants had violated: the North Dakota Human Rights Act (“NDHRA”); the Age Discrimination in Employment Act (“ADEA”); Title VII of the Civil Rights Act of 1964 (“Title VII”); the Employee Retirement Income Security Act (“ERISA”); the Consolidated Onmibus Reconciliation Act of 1985 (“COBRA”); and the Older Workers Benefit Protection Act (“OWBPA”). Plaintiff also asserted a common law employee claim for benefits. Judge Conmy dismissed plaintiff’s Title VII, COBRA, and OWBPA claims, leaving his ADEA, NDHRA, ERISA and common law claim for benefits. Defendants have moved for summary judgment on all of plaintiff’s remaining claims and assert they are entitled to judgment as a matter of law.

II. Summary Judgment Standard

            Summary judgment is appropriate if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). Rule 56 of the Federal Rules of Civil Procedure “mandates the entry of summary judgment . . . against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Celotex, 477 U.S. at 322. If the moving party has supported its motion for summary judgment, the nonmoving party has an affirmative burden placed on it to go beyond the pleadings and show a genuine triable issue of fact. Commercial Union Ins. Co. v. Schmidt, 967 F.2d 270, 271 (8th Cir. 1992). However, the court considering a motion for summary judgment must view the evidence in the light most favorable to the nonmoving party who enjoys “the benefit of all reasonable inferences to be drawn from the facts.” Vacca v. Viacom Broadcasting of Missouri, Inc. et al., 875 F.2d 1337, 1339 (8th Cir. 1989) (citation omitted).

             Summary judgment is improper if the court finds a genuine issue of material fact; however, “the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment . . .” Schmidt, 967 F.2d at 271-72 (citation omitted). The issue is whether “the evidence is sufficient to allow a reasonable jury to return a verdict for the non-moving party.” Landon v. Northwest Airlines, Inc., 72 F.3d 620, 624 (8th Cir. 1995).III. Discussion

            Defendants argue plaintiff’s ADEA and NDHRA claims should be dismissed because they are either time-barred or fail to state a prima facie case of age discrimination. Defendants assert that although ten substantially younger design engineers were hired during plaintiff’s employment, plaintiff has no valid claims because he did not apply for any of the positions within the applicable statute of limitations.

            To prove a prima facie case of age discrimination in a hiring context, plaintiff must prove: (1) he belonged to the protected class; (2) he was qualified for the positions for which he applied; (3) he was not hired for the positions applied for despite being sufficiently qualified; and (4) the employer filled the position with a person sufficiently younger to permit an inference of age discrimination. Schiltz v. Burlington Northern R.R., 115 F.3d 1407, 1412 (8^th Cir. 1997). Because plaintiff filed a complaint against defendants in state court on December 13, 1999, all claims accruing before December 13, 1996 are time-barred. See N.D.C.C. § 14-02.4-19 (requiring a three-year statute of limitations for the NDHRA). Of the ten “younger” people plaintiff identified in his deposition that were hired during his period of employment, six were hired after December 13, 1996. However, plaintiff did not apply for any of the six positions. Plaintiff insists he did not need to apply for the positions because he already knew he would not be considered for the positions. Secondly, plaintiff argues some of the hirings took place when employees of Spra-Coupe, like plaintiff, were “off limits” because defendants had made the decision to sell Spra-Coupe.

            Even if plaintiff was off limits from being hired by other divisions of Melroe at the time the younger engineers were hired, plaintiff’s claim still fails. Assuming plaintiff makes a prima facie case, thus raising an inference of age discrimination, the burden of production then shifts to defendant to articulate a legitimate, nondiscriminatory reason for its decision not to hire him. McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802. If defendant meets that burden of production, then plaintiff must prove that defendant’s reason is merely a pretext for discrimination. Id. at 804.

            Melroe has stated its legitimate, nondiscriminatory reason for placing plaintiff off limits from being hired for other engineering positions with Melroe was because Spra-Coupe, the product line plaintiff worked on, was for sale. Melroe believed it necessary to offer potential purchasers those employees possessing unique technical or sales knowledge associated with Spra-Coupe. In a memorandum prepared to solicit purchasers for the Spra-Coupe line, Melroe stressed the fact that knowledgeable and capable Spra-Coupe division employees would be transferred as part of the transaction. This explanation meets defendants’ burden of production. Plaintiff must prove defendants’ reason is merely a pretext for discrimination. Plaintiff cites no objective facts to demonstrate he was placed off limits for discriminatory reasons rather than because Spra-Coupe was up for sale. Consequently, plaintiff has failed to show a triable issue of fact on failure to hire him for other positions.

            Although plaintiff has no claim arising out of defendants’ failure to hire him for other positions, his termination due to defendants’ reduction in force must also be analyzed for evidence of age discrimination. To establish a prima facie case of age discrimination in a reduction-in-force (RIF) context, the plaintiff must: (1) show that he is within the protected age group; (2) show that he met the applicable job qualifications (3) show that he was terminated; and (4) produce some additional showing indicating age was a factor in termination. Doerhoff v. McDonnell Douglas Corporation, 171 F.3d 1177, 1180 (8^th Cir. 1999). It is questionable whether plaintiff can meet the fourth requirement of proving a prima facie case, but even assuming plaintiff has established a prima facie case, plaintiff’s claim still fails.

            Once the prima facie case is established, the burden of production shifts to the defendant to articulate a legitimate non-discriminatory reason for plaintiff’s termination. Id. at 1179. If defendant comes forward with a non-discriminatory explanation, the presumption of unlawful discrimination drops and the burden of production returns to plaintiff to rebut defendant’s explanation by showing the proffered reason is actually a pretext for intentional discrimination. Id.

            As stated previously, Melroe has articulated its legitimate, nondiscriminatory reason for firing defendant was because Spra-Coupe, the product line plaintiff worked on, was sold to another company. Melroe had been acquired by Ingersoll-Rand Company (Ingersoll) in May 1995. At the time of Ingersoll’s acquisition, Spra Coupe was the only agricultural product in Ingersoll’s portfolio. In August 1997, Melroe, with Ingersoll’s approval, decided to sell the Spra-Coupe business. At that time, Melroe decided that employees possessing technical or sales knowledge associated with Spra-Coupe, including engineering personnel like plaintiff, would be transferred along with the business.

            In June 1998, AGCO Corporation (AGCO) entered into a Sales Agreement with Ingersoll to purchase the Spra-Coupe business. The agreement between defendant Melroe and AGCO included transfer to AGCO of the Spra-Coupe engineering personnel. The employees were terminated effective September 30, 1998, but the agreement between Melroe and AGCO required Melroe to offer bonuses to those accepting employment with AGCO, and AGCO was required to offer employment to the engineering personnel and other Spra Coupe employees.

            Defendants’ proffered legitimate, non-discriminatory reason given for terminating plaintiff shifts the burden of production back to plaintiff. Plaintiff, however, is unable to demonstrate that defendants’ proffered reason for terminating plaintiff was a pretext for discrimination. Plaintiff asserts the sale of Spra-Coupe provided an elaborate scheme by which Melroe could get rid of its older, more expensive engineering employees and replace them with those under the age of thirty. Plaintiff claims Melroe transferred the younger Spra-Coupe employees to other departments and then designated the older employees off limits to other departments. Plaintiff, nonetheless, fails to cite facts or statistics that demonstrate the sale of Spra-Coupe was a ruse to get rid of older employees. There are no facts upon which to base an inference of discrimination. Plaintiff is unable to demonstrate defendant’s proffered reason was a pretext for discrimination. Thus, all of plaintiff’s age discrimination (ADEA and NDHRA) claims are without merit.

            Defendants also assert plaintiff’s ERISA retaliation claim and his claim for ERISA benefits are both meritless. Plaintiff argues he was fired, at least in part, because he was pursuing a claim for benefits. Under plaintiff’s theory, employers discriminate against older workers because these workers tend to have accrued more benefits and exercised their right to benefits more frequently, making them more expensive to a company.

            Plaintiff must prove three elements to establish a prima facie case for discrimination under ERISA: (1) that he participated in a statutorily protected activity; (2) that an adverse employment action was taken against him; and (3) that a causal connection existed between the two. Montgomery v. John Deere & Company, 169 F.3d 556, 561 (8^th Cir. 1999). If the claimant is able to establish a prima facie case of a violation, the burden shifts to the employer to articulate a legitimate, nondiscriminatory reason for its action. Kinkead v. Southwestern Bell Telephone Co., 49 F.3d 454, 456 (8^th Cir. 1995). If the employer does so, the burden shifts back to the claimant to prove that the proffered reason is pretextual. Id.

            Defendants assert plaintiff has failed to make a prima facie case regarding prongs one and three. However, for purposes of this analysis, this court will assume plaintiff can make a prima facie case. Even assuming this, plaintiff’s claim nevertheless fails. If the claimant is able to establish a prima facie case of a violation, the burden shifts to the employer to articulate a legitimate, nondiscriminatory reason for its action. Kinkead v. Southwestern Bell Telephone Co., 49 F.3d 454, 456 (8^th Cir. 1995). If the employer does so, the burden shifts back to the claimant to prove that the proffered reason is pretextual. Id. As previously noted, Melroe has stated its legitimate, nondiscriminatory reason for firing plaintiff was because Spra-Coupe, the product line plaintiff worked on, was sold to another company.

            Over the course of his eight and one-half years of employment with Melroe, plaintiff had more than once voiced his displeasure over his perceived low wages and lack of benefits. In October 1997, Thyberg wrote a letter to Melroe’s Product Design Manager demanding a raise from $25 an hour to $40 per hour. In the letter, plaintiff asserted he had lost approximately $100,000 in benefits. He requested the pay raise, though, to compensate him for his current lack of benefits. Defendant Melroe gave plaintiff the raise. In his deposition, plaintiff stated in his deposition after he got the pay raise, he dropped his complaints about the past benefits, or at least tempered any demands.

            Plaintiff also on April 9, 1998 sent a letter to defendant’s Human Resources Manager, complaining about his inability to contribute to a tax-deferred retirement plan on the same basis as full-time salaried employees. Plaintiff was advised he was qualified and he enrolled in two plans in April 1998. Plaintiff questioned, however, why he had not been eligible to participate in the plans sooner. Plaintiff was told he was ineligible to participate in the Clark plan previously applicable, but the Ingersoll plan replaced the Clark plan in January 1997. Melroe did not offer the plan to qualifying temporary employees until May 1998.

            After defendant articulates its proffered reason for firing plaintiff (sale of Spra Coupe), plaintiff is unable to prove that defendant’s reason is pretextual. See Montgomery v. John Deere & Company, 169 F.3d 556, 559 (8^th Cir. 1999) (dismissing age discrimination claim where even if plaintiff established a prima facie case, the plaintiff did not present evidence sufficient to support a finding that defendant’s declared reason for firing him was a pretext for age discrimination). The tax-deferred retirement benefit plans plaintiff was able to take part in starting in April 1998 do not appear to be relevant to the discussion of plaintiff’s termination. Melroe made its decision to sell Spra-Coupe and transfer the vital employees with the line before April 1998, when plaintiff began to take part in the plans.

            The request for a raise due to lack of benefits in October 1997 does not support an inference of discrimination. It would not make sense for Melroe to fire plaintiff to avoid paying him benefits when plaintiff had dropped his demand for benefits after getting a raise. Plaintiff’s argument is too weak to overcome Melroe’s proffered reason for terminating plaintiff, the sale of Spra-Coupe. Plaintiff’s ERISA retaliation claim is without merit.

            Plaintiff also makes a claim for benefits to which he argues he would have been entitled had he been properly classified. Plaintiff essentially argues that he was a common law employee of defendant and as such, was entitled to benefits. Defendants do not challenge the merits of this claim, but instead assert that the statute of limitations has already passed and plaintiff’s claim is barred.

            At the outset, it is important to establish that plaintiff’s claim for benefits comes under ERISA, not the common law, although at times courts may borrow common law doctrines to interpret ERISA terms. See Vizcaino v. Microsoft Corp., 97 F.3d 1187, 1192 (8^th Cir. 1996), modified, 120 F.3d 1006 (9^th Cir. 1997) (en banc), cert. denied, 522 U.S. 1098 (1998) (finding Congress intended the courts to fashion a body of federal common law to govern ERISA suits and, therefore the courts may borrow from state law where appropriate). ERISA preempts all other state law claims insofar as they “relate to” an employee benefit plan under ERISA. 29 U.S.C. § 1144(a); see Wilson v. Zoellner, 114 F.3d 713, 716 (8th Cir. 1997). There is no evidence plaintiff has a claim for benefits that does not “relate to” an ERISA plan. This court’s task then is to determine if plaintiff articulates any claim for benefits under ERISA that is not time-barred.

            Defendants argue according to Bennett v. Federated Mut. Ins. Co., 141 F.3d 837, 838 (8^th Cir. 1998), plaintiff’s claim for benefits accrued many years ago at the beginning of his employment. According to Bennett, “there are times . . . when an ERISA beneficiary’s cause of action accrues before a formal denial, and even before a claim for benefits is filed when there has been a clear repudiation by the fiduciary which is clear and made known to the beneficiary.” Id. at 839. Defendants assert that from the beginning of plaintiff’s employment, they made clear he would not be provided benefits. Therefore, defendants argue plaintiff’s claim accrued then. Under a two-year statute of limitations , which the defendants argue applies, plaintiff would have no claim for benefits.

            This argument, however, fails to recognize the fact that the ERISA plans changed while plaintiff was employed. In January 1997, Ingersoll plans replaced the previous tax-deferred retirement plans offered by Clark and previously Melroe. Ingersoll’s plans included temporary employees like plaintiff. However, Melroe did not offer the Ingersoll plans until after plaintiff complained in April 1998. Accepting plaintiff’s factual recitation as true, he was injured at the time the Ingersoll plans went into effect for Melroe employees in January 1997. Under defendants’ theory, however, plaintiff’s claim would have accrued before any injury to plaintiff. Such a view contradicts accrual law and belies common sense.

            Since defendants’ view cannot be correct, the question is when plaintiff’s claim for benefits accrued. It seems the claim for the tax-deferred retirement benefits did not accrue until plaintiff found out in April 1998 he qualified for two tax-deferred savings plans. The “discovery rule” generally applies to ERISA claims. Bennett, 141 F.3d at 839. Under the discovery rule, a cause of action accrues when a plaintiff discovers or with due diligence should have discovered the injury that is the basis of the litigation. Id. Plaintiff had no reason to believe he was entitled to benefits until he asked about it in April 1998. To hold as a matter of law plaintiff should have known about the fact he was included in some of these plans before Melroe was aware he was covered would seem to work an injustice.

            All that must be decided now is whether plaintiff’s claim survives defendants’ motion for summary judgment. If there is a genuine issue of fact about whether an action accrued before the statute of limitations, then summary judgment is not appropriate. See Bressler v. Graco Children’s Products, Inc., 43 F.3d 379, 382 (8^th Cir. 1994). There is a genuine issue of fact here and thus defendants’ motion for summary judgment on plaintiff’s claim for ERISA benefits is denied. CONCLUSION

            Based on the foregoing, it is hereby ORDERED that the defendants’ motion for summary judgment (Doc # 27) be GRANTED IN PART AND DENIED IN PART. Plaintiff’s ADEA and NDHRA age discrimination claims as well as plaintiff’s ERISA retaliation claim, are DISMISSED WITH PREJUDICE. Plaintiff’s ERISA claim for benefits survives.

Dated: June____, 2001

Karen K. Klein
United States Magistrate Judge