Mattenson, Charles v. Baxter Healthcare ( 2006 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
Nos. 04-4270, 04-4331
CHARLES R. MATTENSON,
Plaintiff-Appellee/Cross-Appellant,
v.
BAXTER HEALTHCARE CORPORATION,
Defendant-Appellant/Cross-Appellee.
____________
Appeals from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 02 C 3283—John W. Darrah, Judge.
____________
ARGUED SEPTEMBER 9, 2005—DECIDED FEBRUARY 21, 2006
____________
Before BAUER, POSNER, and WOOD, Circuit Judges.
POSNER, Circuit Judge. Mattenson, a patent lawyer,
brought suit against his former employer, Baxter
Healthcare, under the Age Discrimination in Employment
Act. The jury found in Mattenson’s favor and awarded
him more than half a million dollars in back pay, which
the judge then doubled, in accordance with the statute,
because the jury had found that the violation of the ADEA
was willful. But he refused to award front pay, precipitat-
ing Mattenson’s cross-appeal.
2 Nos. 04-4270, 04-4331
Mattenson was 51 years old when he was fired in 2001
after having worked for Baxter for 14 years. In asking the
jury to infer that he was fired because of his age, Matten-
son emphasized that he was fired just 10 days before his
early-retirement benefits would have vested; that he
was replaced by a much younger man at a higher salary
($258,000 versus his salary of $240,000); that during his
entire 14 years of employment by Baxter all his semi-annual
performance evaluations (until the last, which was only a
few months before his termination) had stated that he was
meeting expectations; that his superiors had pretended that
his termination was voluntary on his part and thus were
unworthy of belief concerning the reason for his termina-
tion; and that three other employees of the division in which
Mattenson worked (the Renal Division, which manufactures
nondrug products for the treatment of kidney failure) had
been fired in circumstances strongly suggestive of age
discrimination. It is uncertain whether one of the three was
actually employed by the Renal Division or merely worked
closely with the division’s employees, but nothing turns on
the answer to that question.
Baxter’s principal defense in the district court was that
Mattenson had quit rather than having been fired. But the
company mentioned a history of performance failures
that would have justified firing him, culminating in his
missing patent-filing deadlines in Japan and Brazil that
resulted in the company’s failing to obtain patent protection
in those countries for one of its new products. Baxter
attributed the failure to Mattenson’s poor communica-
tion with his paralegals and with the company’s scien-
tists whose inventions he sought patents for. Had the
jury believed the evidence, it would probably have con-
cluded that, if he was fired (as the evidence strongly
suggested), it was for doing a poor job rather than for be-
Nos. 04-4270, 04-4331 3
ing on the verge of obtaining vested early-retirement
benefits or because of some generalized dislike of older
employees.
Mattenson’s principal tactic for persuading the jury not to
credit the evidence of his deficient performance was to
emphasize his unbroken stream of “meets expectations”
evaluations until the last. Until then, his lawyer told the jury
in opening argument, Mattenson “had received nothing but
reviews that say meets expectations, meets expectations,
meets expectations in every area all the time.” “[M]eets
expectations,” the lawyer said, means that an employee
“operate[s] at the highest level of their profession.” These
statements, and the testimony that Mattenson gave in
support of them, were misleading. For in 1996 Mattenson
had been placed on a “performance” plan because of
problems of communication.
The district judge refused to allow Baxter to place the plan
in evidence or make any reference to it. The judge’s ground
was that it was remote in time and different in grounds
from Mattenson’s termination. It was neither. The 1996 plan
lists Mattenson’s “developmental needs” as needing to
avoid “derogatory, condescending or disrespectful behav-
ior,” “verbosity,” and “not being careful or thoughtful in
interacting with others.” Under the heading of “desired
results,” the plan specifies that “communication will be
perceived as clear and concise.” The plan states that “failure
to achieve and maintain the performance standards outlined
above will lead to additional disciplinary action, up to and
including immediate termination.” Baxter contends that it
was problems of communication with scientists and
paralegals that resulted in the missed patent deadlines that
led to subjecting Mattenson to the second performance plan.
4 Nos. 04-4270, 04-4331
The judge’s error was compounded by the fact that
Mattenson’s termination was precipitated by his refusal to
comply with the second plan. Baxter argued that it was
that refusal, not anything to do with his age, that caused his
termination; and a refusal to comply with the lawful order
of one’s employer is indeed not conduct protected by the
age discrimination law. E.g., Cengr v. Fusibond
Piping Systems, Inc., 135 F.3d 445, 452 (7th Cir. 1998); Coco v.
Elmwood Care, Inc., 128 F.3d 1177, 1180 (7th Cir. 1997);
Machinchick v. PB Power, Inc., 398 F.3d 345, 354 (5th Cir.
2005). Mattenson’s riposte was that the purpose of the
(second) performance plan “was to put him out the door, or,
if he said he’d go along with them, to put him out the door
in six months or three months.” But when he was put on the
plan, he had already been employed for five years after
being put on a similar plan. Had Baxter been permitted to
present the 1996 plan to the jury, the company’s contention
that Mattenson was fired for refusing to comply with the
second plan would have been greatly strengthened. And
since Mattenson successfully completed the 1996 plan,
presenting it to the jury would also have undermined his
claim that Baxter always fires employees it places on
performance plans. The claim was important because, if
true, it implied that Mattenson’s failure to complete the
second performance plan could not have been a factor in his
being fired.
It was a close case; the judge’s error entitles Baxter to
a new trial. There were other errors as well, which should be
corrected on remand. The judge on his own initiative gave
a McDonnell-Douglas instruction despite tireless repetition
by appellate courts that the burden-shifting formula of that
case is not intended for the guidance of jurors; it is intended
for the guidance of the judge when asked to resolve a case
on summary judgment. E.g., St. Mary’s Honor Center v. Hicks,
Nos. 04-4270, 04-4331 5
509 U.S. 502, 510-12 (1993); Hennessy v. Penril Datacomm
Networks, Inc., 69 F.3d 1344, 1350 (7th Cir. 1995); Sanders v.
New York City Human Resources Administration, 361 F.3d 749,
758 (2d Cir. 2004); Watson v. Southeastern Pennsylvania
Transportation Authority, 207 F.3d 207, 221 (3d Cir. 2000).
The judge compounded the error by instructing the
jury that if Mattenson “has established each of the essen-
tial elements of his claim, then you will consider the defense
alleged by Baxter Healthcare Corporation that the treatment
of Charles Mattenson was for a reasonable factor other than
age.” Wyninger v. New Venture Gear, Inc., 361 F.3d 965, 979
(7th Cir. 2004); Partington v. Broyhill Furniture Indus., Inc.,
999 F.2d 269, 271 (7th Cir. 1993); Keyes v. Secretary of Navy,
853 F.2d 1016, 1026 (1st Cir. 1988); see Smith v. City of
Jackson, 125 S. Ct. 1536, 1543-44 (2005) (plurality opinion).
This was the equivalent of saying that Mattenson was a
tenured employee who could therefore be fired only for
cause; in fact he was an employee at will who could be fired
for any reason not forbidden by the age discrimination law,
such as failing to trim his mustache or eating with his fork
in his left hand.
A related error was to instruct the jury that it “must
determine whether or not [Mattenson’s termination] is
legitimate or only a pretext for age discrimination,” the
implication being that proof of pretext compels, rather
than merely permits, an inference of discriminatory in-
tent. The Supreme Court held in St. Mary’s Honor Center v.
Hicks, supra, that proof of pretext does not compel an
inference of discriminatory intent. “[T]he real reasons
behind an employer’s action may be shameful or foolish, but
unrelated to . . . discrimination, in which event there is no
liability.” Rudin v. Lincoln Land Community College, 420 F.3d
712, 726 n. 9 (7th Cir. 2005); Anderson v. Baxter Healthcare
6 Nos. 04-4270, 04-4331
Corp., 13 F.3d 1120, 1124 (7th Cir. 1994). After all, there are
all sorts of bad reasons for an employment action besides
discriminatory reasons, and an employer might want to
conceal the bad but nondiscriminatory reason for its firing
or taking other adverse action against the plaintiff, in order
to avoid bad publicity.
Another trial error, this one relating to whether Mattenson
quit because he didn’t want to comply with the performance
plan, or was fired, was the judge’s failure to shield any part
of the notes taken by Baxter’s chief employment lawyer,
Stephanie Bradley, from discovery and use at trial. The
work-product doctrine shields materials that are prepared
in anticipation of litigation from the opposing party, on the
theory that the opponent shouldn’t be allowed to take a free
ride on the other party’s research, or get the inside dope on
that party’s strategy, or (as attempted here) invite the jury
to treat candid internal assessments of a party’s legal
vulnerabilities as admissions of guilt. United States v. Nobles,
422 U.S. 225, 236-38 (1975); United States v. Frederick, 182
F.3d 496, 500 (7th Cir. 1999).
Two of Mattenson’s superiors, after deciding to put
him on the (second) performance plan, met with lawyer
Bradley, ostensibly to learn how to do this; that is im-
plausible, and the jury was entitled to find that the real
reason was to discuss the severance benefits to which
Mattenson would be entitled if he ceased to be employed by
Baxter. This was evidence that Mattenson’s superiors
foresaw that the performance plan was indeed merely a way
station to termination, which, as we know, was one of the
key issues. The meeting made Bradley’s lawyer antennae
wriggle. The notes say such things as “have other heads
rolled for losing patents” (her emphasis); “do we still have
currently employed patent lawyers who’ve lost a patent?”;
Nos. 04-4270, 04-4331 7
“too cursory review [of a Japanese patent decision]”; “can’t
work as hard as these kids, I’ve had a heart attack”; “legal
vulnerabilities: age 51, allege ADA [Americans with Disabil-
ities Act]”; “likely to be gone at yr. end w/ $.” The quoted
language, a substantial fraction of the words on two pages
of scattered handwritten notes, is work product: it is a
lawyer’s thoughts about a potential suit against the com-
pany, noting some of the strengths and weaknesses of the
company’s case. Bradley was thinking and writing about a
possible case—a case that in fact materialized—and, pro-
vided the prospect of litigation was not remote (and it was
not), the fact that the case hadn’t begun and might never
be brought did not disqualify her jottings from the shelter of
the work-product doctrine. Fed. R. Civ. P. 26(b)(3); Logan v.
Commercial Union Ins. Co., 96 F.3d 971, 977 (7th Cir. 1996);
compare EEOC v. Lutheran Social Services, 186 F.3d 959, 968
(D.C. Cir. 1999). It doesn’t matter that Mattenson’s two
supervisors testified that the meeting was not in anticipation
of litigation. That testimony was consistent with the meet-
ing’s having gotten into issues that the lawyer recognized as
legal and opined on in the notes that she took at the meet-
ing.
But that was not all that the notes contained. They also
contained evidence that the company was anticipating
that notwithstanding the performance plan, which Mat-
tenson had not yet rejected, he would be terminated. Apart
from the “likely to be gone at yr. end,” the notes mention a
“severance equivalent.” This is not strong evidence that the
performance plan was just a ploy to get rid of Mattenson,
but it is some evidence, and it could have been presented to
the jury by whiting out the portions of the notes that
reflected Bradley’s legal thinking. Rule 26(b)(3) of the civil
rules distinguishes between materials “prepared [by one’s
opponent] in anticipation of litigation” that contain “the
8 Nos. 04-4270, 04-4331
mental impressions, conclusions, opinions, or legal theories
of an attorney or other representative of a party concerning
the litigation,” and those that do not contain such impres-
sions, conclusions, etc. The former are out of bounds, but
the latter are discoverable “upon a showing that the party
seeking discovery has substantial need of the materials in
the preparation of the party’s case and that the party is
unable without undue hardship to obtain the substantial
equivalent of the materials by other means.” See Hickman v.
Taylor, 329 U.S. 495, 511-12 (1947); In re Cendant Corp.
Securities Litigation, 343 F.3d 658, 663 (3d Cir. 2003).
Mattenson has not made that showing, but should be
allowed to do so on remand. What he should not be allowed
to do is cross-examine lawyer Bradley about the company’s
“legal vulnerabilities.” That cross-examination, irrelevant
and highly prejudicial, should not have been permitted
quite apart from the work-product doctrine. Fed. R. Evid.
403. Similarly, at the new trial Mattenson’s lawyer must not
be allowed to harp on Baxter’s delay in responding to his
discovery request for Bradley’s notes, as he did at the
first trial. The judge was too permissive with respect to
the lawyer’s use of innuendo to turn the jury against Baxter.
After initially expressing doubt that the notes con-
tained work product, the judge rejected the application of
the privilege on the ground of fraud. The privilege is indeed
forfeited if the attorney is assisting his client to commit a
crime or a fraud, In re Grand Jury Proceedings, 102 F.3d 748,
750-52 (4th Cir. 1996), but of course “a party seeking to
invoke the crime-fraud exception must at least demonstrate
that there is probable cause to believe that a crime or fraud
has been attempted or committed and that the communica-
tions were in furtherance thereof.” In re Richard Roe, Inc., 68
F.3d 38, 40 (2d Cir. 1995). The judge did not explain clearly
why he thought there was fraud here, but as best we can
Nos. 04-4270, 04-4331 9
reconstruct his cryptic explanation it is that the notes
contain material that contradicted Baxter’s defense; and this
is the ground on which Mattenson defends the judge’s
ruling. Of course there was inconsistency—that is why
Mattenson wanted to use the notes at trial. But if inconsis-
tency between work product and other evidence were
treated as proof of fraud, there would be no work-product
privilege.
Baxter attacks two other types of evidence as prejudicial.
The first is Mattenson’s testimony that his termination
inflicted emotional distress on him and his family. Ordi-
narily such testimony would be irrelevant, because, as
we note later, the Age Discrimination in Employment
Act does not authorize the award of common law damages.
But Baxter opened the door to that testimony by its con-
tention that Mattenson had quit voluntarily. He was entitled
to testify that he would never have done that, because of the
emotional as well as financial damage that leaving Baxter
would have imposed (and did in fact impose); and that he
quit only because by consenting to the performance plan he
would have been making admissions of inadequate perfor-
mance that Baxter could use against him after it fired him
and he sued.
The other type of evidence that Baxter attacks as prejudi-
cial is testimony concerning age discrimination against other
employees of the Renal Division. Baxter points out that the
alleged discrimination was by other supervisors, not by
Mattenson’s supervisors, that the division has
7,000 employees, that the evidence created trials within
the trial, which could well have confused the jury, and
that the evidence poisoned the jury by exposing it to
“ageist” remarks by those other supervisors.
10 Nos. 04-4270, 04-4331
Within a period of 11 months centered on Baxter’s placing
Mattenson on the second performance plan in July 2001, the
Renal Division fired three other long-term employees,
ranging in age from 55 to 61, one of whom was verging on
eligibility for a full pension. In the same period, a vice-
president of Baxter told a meeting of executives (or so
Mattenson claims, though no such quotations appear in the
pages of the record that he cites for the claim, or anywhere
else that we can find) that “we have too many old expensive
people in the family area” and “we could get younger
stronger and faster people that did not have the expense
that went along with them, the family obligations and those
types of things,” and these remarks were echoed by other
executives. One of the three employees who was fired told
Baxter’s vice-president of human resources about the
comments at the meeting, and she, according to his testi-
mony, agreed with the sentiments but said that the
word “old” should not have been used. (The employee
in question was entitled to testify to what she said, be-
cause it was an admission of the defendant’s agent made
within the scope of her employment. Baxter could have
called her to the stand to give her own version of the
conversation, but it did not.) Another of the three employees
was told that he was being let go because his job was being
eliminated; but within months of his departure the job
was resurrected and filled by a 35-year-old.
These were not lawyers, and the executives who made the
“ageist” comments were not in Mattenson’s chain of
command. A division of 7,000 employees in a high-tech firm
like Baxter contains hundreds of executives, and the fact
that some may dislike old workers and even fire old work-
ers because of their age is weak evidence that a particular
older employee was fired because of his age. Proof of a
pervasive firm or divisional culture of prejudice against old
Nos. 04-4270, 04-4331 11
or female or minority workers is stronger evidence, how-
ever. E.g., Emmel v. Coca-Cola Bottling Co., 95 F.3d 627, 632
(7th Cir. 1996); Cummings v. Standard Register Co., 265 F.3d
56, 63 (1st Cir. 2001); Ryther v. KARE 11, 108 F.3d 832, 843-44
(8th Cir. 1997). “Pervasive” implies some likelihood that the
plaintiff lost his job because of discrimination, though not a
certainty, because even in a discriminatory workplace some
employees are fired for reasons unrelated to their member-
ship in a group that the employer discriminates against.
The evidence in this case, based on remarks made at
just one meeting, fell so far short of proving a pervasive
culture of discrimination that had the judge been concerned
that the evidence would extend the trial unduly, or confuse
or prejudice the jurors, he would have been within his rights
to exclude the evidence under Rule 403 of the evidence
rules. Wyninger v. New Venture Gear, Inc., supra, 361 F.3d at
975; Kline v. City of Kansas City, 175 F.3d 660, 668 (8th Cir.
1999). That might well have been the better ruling. But
bearing in mind the deference that appellate courts give to
evidentiary rulings, we cannot say that he committed
reversible error in allowing the evidence to be presented.
One of the three fired employees testified that he was fired
on the verge of being entitled to a full pension, which is
what happened to Mattenson. And in this day and age, for
executives at the vice-presidential level of a major business
enterprise to be talking openly about the desirability of
getting rid of old employees is at least some evidence of the
discriminatory workplace culture of which we spoke. Cf.
Slattery v. Swiss Reinsurance America Corp., 248 F.3d 87, 92-93
(2d Cir. 2001); Williams v. Raytheon Co., 220 F.3d 16, 20 (1st
Cir. 2000); Brewer v. Quaker State Oil Refining Corp., 72 F.3d
326, 334 (3d Cir. 1995). Not that testimony about a work-
place “culture” as such is admissible; it is too vague. Kadas
v. MCI Systemhouse Corp., 255 F.3d 359, 360 (7th Cir.
12 Nos. 04-4270, 04-4331
2001). But testimony based on the personal knowledge of
the testifying employees can provide a basis for an inference
that discriminatory attitudes permeate a firm’s employment
policies and practices.
Language in some judicial opinions suggests that prejudi-
cial remarks are always to be excluded unless they are made
by someone who had input into the decision to terminate (or
take other challenged adverse employment action against)
the plaintiff. E.g., Steger v. General Electric Co., 318 F.3d 1066,
1079 (11th Cir. 2003); Wyvill v. United Companies Life Ins. Co.,
212 F.3d 296, 304 (5th Cir. 2000). This language should not
be taken literally, however. Hunter v. Allis-Chalmers Corp.,
797 F.2d 1417, 1423 (7th Cir. 1986); Brewer v. Quaker State Oil
Refining Corp., supra, 72 F.3d at 333-34. The admissibility of
“stray remarks,” as the cases call them, is governed by Rule
403 of the evidence rules, which establishes a standard
rather than a rule—and a standard that tilts in favor of
admissibility; the probative value of the evidence must not
merely be outweighed, it must be substantially outweighed,
by its negative consequences, to be excludable. And that
will depend on context—the circumstances in which the
remarks were made, such as the number of similar remarks,
when they were made, and by whom and to whom they
were made. Cummings v. Standard Register Co., supra, 265
F.3d at 63; Ercegovich v. Goodyear Tire & Rubber Co., 154 F.3d
344, 356-57 (6th Cir. 1998).
It remains to consider the cross-appeal. An award of front
pay compensates an unlawfully discharged employee for
the loss of earnings that he sustains as a result of the
discharge. Pollard v. E.I. du Pont de Nemours & Co., 532 U.S.
843, 846 (2001); Fortino v. Quasar Co., 950 F.2d 389, 398 (7th
Cir. 1991). The familiar common law duty of mitigating
damages is imposed: the employee must make a diligent
Nos. 04-4270, 04-4331 13
search for comparable employment. Williams v. Pharmacia,
Inc., 137 F.3d 944, 954 (7th Cir. 1998); Wheeler v. Snyder Buick,
Inc., 794 F.2d 1228, 1235-36 (7th Cir. 1986). Mattenson
testified that he applied for jobs with all the companies and
law firms that patent medical devices and none would give
him a job. He therefore directed his economic expert to
calculate front pay on the assumption that he will never
earn another penny.
The judge, quite rightly in our view, thought this was
wrong. (Front pay is an equitable, not a legal, remedy, so
is decided by the judge, not the jury. The standard legal
remedy of an award of lost future earnings, while indis-
tinguishable as a practical matter from front pay, is not
available in a suit under the ADEA. See Commissioner v.
Schleier, 515 U.S. 323, 336 (1995); Moskowitz v. Trustees of
Purdue University, 5 F.3d 279, 283 (7th Cir. 1993); compare
Williams v. Pharmacia, Inc., supra, 137 F.3d at 954 (lost
future earnings may be awarded in a Title VII case).)
Mattenson probably won’t be able to find another job that
pays him $240,000 a year. But he can’t insist on Baxter’s
paying him that amount each year until he turns 65 (his
intended retirement age) in order that he can play golf eight
hours a day. Even if he can’t find another job prosecuting
patent applications for dialysis machines, or even another
job as a patent lawyer in the medical-products indus-
try—the largest and most lucrative field of patent activity
today—he should be able to find a job in a law firm, or in a
business firm involved in medical products, a field in which
he has vast experience plus an educational background that
includes a master’s degree in biomedical engineering. He
was required to present persuasive evidence of inability to
find a substitute job; the fact that he contacted 23 firms
without success does not satisfy that burden, given the
range of opportunities open to someone with his back-
14 Nos. 04-4270, 04-4331
ground and experience. See Rodriguez-Torres v. Caribbean
Forms Manufacturer, Inc., 399 F.3d 52, 67 (1st Cir. 2005).
As we have resolved the issue of front pay, there are
no remedy issues (other than attorneys’ fees, costs, and
interest) for determination on remand. The retrial that
we are ordering will therefore be limited to liability, ex-
cept that, in the event Mattenson again prevails, whether he
is entitled to double back pay will depend on whether the
jury again finds a willful violation.
REVERSED AND REMANDED.
Nos. 04-4270, 04-4331 15
A true Copy:
Teste:
_____________________________
Clerk of the United States Court of
Appeals for the Seventh Circuit
USCA-02-C-0072—2-21-06