Scully v. Allegheny Ludlum Corp.

Opinions of the United
2007 Decisions States Court of Appeals
for the Third Circuit
12-10-2007
Scully v. Alghny Ludlum Corp
Precedential or Non-Precedential: Non-Precedential
Docket No. 06-2252
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
____________
No. 06-2252
____________
J. PATRICK SCULLY,
Appellant
v.
ALLEGHENY LUDLUM CORPORATION;
ALLEGHENY TECHNOLOGIES INCORPORATED;
JOHN SCARFUTTI; DAVID MURPHY
____________
On Appeal from the United States District Court
for the Western District of Pennsylvania
(D.C. No. 03-cv-01852)
District Judge: Honorable Joy F. Conti
____________
Submitted Under Third Circuit LAR 34.1(a)
May 15, 2007
Before: FISHER, NYGAARD and ROTH, Circuit Judges.
(Filed: December 10, 2007)
____________
OPINION OF THE COURT
____________
FISHER, Circuit Judge.
J. Patrick Scully sued his former employer, Allegheny Ludlum Corporation,1 and
two former supervisors. He alleged that in terminating him, they violated the Age
Discrimination in Employment Act (ADEA), the Pennsylvania Human Relations Act
(PHRA), and the Employee Retirement Income Security Act (ERISA). The District
Court granted summary judgment in favor of Allegheny Ludlum. We will affirm.
I.
We write exclusively for the parties, who are familiar with the factual context and
legal history of this case. Therefore, we will set forth only those facts necessary to our
analysis.
Scully worked at Allegheny Ludlum for more than twenty-eight years. Following
an economic downturn, Allegheny Ludlum decided to cut costs by reducing its work
force. Gary Phillips, Scully’s direct supervisor, suggested to John Scarfutti, Vice
President for Human Resources, that his department could move forward without Scully.
Scarfutti designated Scully for potential termination. He then directed Phillips to conduct
1
Allegheny Ludlum is a subsidiary of Allegheny Technologies, Inc. Allegheny
Technologies was dismissed from the suit with the filing of Scully’s second amended
complaint.
2
a “peer analysis”2 to determine whether to terminate Scully or Gerald Moser. Phillips’s
analysis gave higher scores to Moser.
The next day, Scully was informed that his position was being eliminated.
Scully’s supervisors presented him with a proposed release agreement under which the
company would provide Scully twenty-six weeks’ base pay, outplacement services, and a
“70/80 pension,” in exchange for a release of legal claims against the company. Scully
did not sign the release. At this time, Scully was already entitled to the 70/80 pension.
He was also fifty-three years old and less than two years from reaching eligibility for a
significantly more generous pension. Meanwhile, Allegheny Ludlum retained Moser,
who was thirty-seven.
Scully brought this action against Allegheny Ludlum and two of its employees.
The defendants moved for summary judgment, and the District Court granted their motion
and dismissed all of Scully’s claims. Scully now appeals.
II.
We have jurisdiction under 28 U.S.C. § 1291. Our standard of review of an order
granting summary judgment is plenary. Carrasca v. Pomeroy, 313 F.3d 828, 832 (3d Cir.
2002). “We apply the same test employed by a district court under Federal Rule of Civil
Procedure 56(c).” Id. Thus, the District Court’s grant of summary judgment “was proper
2
A “peer analysis” is triggered when more than one employee holds a given
position and a supervisor must decide which employee will be terminated. The
supervisor rates employees’ performance in essential job functions (80% of score),
attendance (10%), and years of service (10%).
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only if it appears 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.” Id. at 832-33 (internal quotation marks
and citation omitted). Scully, the non-moving party, is “entitled to every favorable
inference that can be drawn from the record.” Id.
III.
Analysis of Scully’s ADEA and PHRA claims is governed by McDonnell Douglas
Corp. v. Green, 411 U.S. 792 (1973). Under McDonnell Douglas, an employee must first
establish a prima facie claim of discrimination, after which the burden shifts to the
employer to articulate a legitimate, non-discriminatory reason for its adverse employment
decision. Id. at 802. If the employer articulates one or more such reasons, the aggrieved
employee must then proffer evidence that is sufficient to allow a reasonable fact-finder to
find, by a preponderance of the evidence, that the employer’s reasons are false or
pretextual. Id. at 804-05.
Allegheny Ludlum conceded that Scully established a prima facie claim of age
discrimination. However, it offered the following as legitimate, non-discriminatory
reasons for the employment decision: the company’s downsizing initiative, the peer
analysis process, Scully’s past performance problems, and his disciplinary record.
The burden then shifted to Scully to cite some evidence, direct or circumstantial,
from which a fact-finder could reasonably either (1) disbelieve Allegheny Ludlum’s
articulated explanation, or (2) believe that an invidious discriminatory reason was more
likely than not a motivating or determinative cause of his termination. As Scully
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correctly argues, one of these is sufficient; the employee does not have to prove both that
the explanation is implausible and that discrimination was a motivating factor. Waldron
v. SL Indus., Inc., 56 F.3d 491, 494-95 (3d Cir. 1995).
Scully cannot carry his burden by showing that Allegheny Ludlum’s decision was
“wrong or mistaken.” Fuentes v. Perskie, 32 F.3d 759, 765 (3d Cir. 1994). Rather, he
must demonstrate such “weaknesses, implausibilities, inconsistencies, incoherencies, or
contradictions in the employer’s proffered legitimate reasons for its action that a
reasonable factfinder could rationally find them unworthy of credence.” Id.
Scully presented evidence that Scarfutti decided to terminate Scully well before
Phillips conducted a peer analysis, and that the peer analysis process was pro forma and
was manipulated to ensure that Scully would be terminated without leaving the company
vulnerable to litigation. In addition, Scully argues that the pension benefit calculations
that took place before the termination decision was final show that Allegheny Ludlum’s
proffered reasons were pretextual. The District Court rejected these arguments, reasoning
that even if they were true, they did not impugn Allegheny Ludlum’s legitimate non-
discriminatory reasons for the termination. We agree.
Scarfutti’s involvement in the decision to terminate Scully does not indicate that
Scully’s age was a factor. Scarfutti knew Scully well, as he had been Scully’s direct
supervisor for several years, and it is only logical that his input was part of the
termination decision. Contrary to Scully’s assertions, the timeline of his termination is
not suspicious. Prior to the peer analysis, his name was put on a list of employees for
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possible termination. However, during the time period when management was discussing
and implementing the downsizing, all departments of Allegheny Ludlum created lists of
employees for potential termination. The presence of Scully’s name on this list is not an
indication of improper consideration of his age.
The same reasoning holds true for the calculations of Scully’s pension benefits,
which took place more than a month before his termination. First, the record does not
show who asked for the calculations; it could have been Scully himself. Second, the
context of the calculations is important. Allegheny Ludlum was in economic distress and
was implementing significant company-wide downsizing. In this situation, calculations
of various employees’ pension benefits would be expected and do not undermine the
company’s proffered explanations for Scully’s termination.
Scully argues that the peer analysis results were fabricated post hoc, and that the
process was fundamentally flawed. He is correct that peer analysis was discussed within
management as an effective tool for shielding Allegheny Ludlum from liability.
However, the record demonstrates that peer analysis also served a substantive managerial
function, and its defensive legal purpose does not support Scully’s claim that he was
terminated because of his age.
We have reviewed the remainder of Scully’s arguments, and we conclude that he
has failed to carry his burden of showing that Allegheny Ludlum’s legitimate
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nondiscriminatory reasons for terminating him were pretextual.3 Therefore, the District
Court properly granted summary judgment for Allegheny Ludlum, and the individual
defendants cannot be liable under the PHRA for aiding and abetting discrimination.
IV.
Section 510 of ERISA “makes it unlawful to interfere with the attainment of rights
or benefits associated with an employee benefit plan.” DiFederico v. Rolm Co., 201 F.3d
200, 203 (3d Cir. 2000). Scully was terminated while he was eligible for a pension
benefit of approximately $850 per month. In less than two years, with the attainment of
thirty years’ seniority, he would have been eligible for a pension benefit of more than
$2,700 per month beginning at age 65.
Scully must demonstrate that Allegheny Ludlum had the specific intent to violate
ERISA. DeWitt v. Penn-Del Directory Corp., 106 F.3d 514, 522 (3d Cir. 1997). We
have explained that:
where the only evidence that an employer specifically intended to violate
ERISA is the employee’s lost opportunity to accrue additional benefits, the
employee has not put forth evidence sufficient to separate that intent from
the myriad of other possible reasons for which an employer might have
discharged him. This kind of deprivation occurs every time an ERISA
employer discharges an employee and is not alone probative of an intent to
3
Allegheny Ludlum’s employee performance documentation gives credence to its
legitimate non-discriminatory reasons for Scully’s termination. More than a year prior to
his termination, Scully had exhibited inappropriate behavior, including slamming a
meeting room door with such force that the door knob broke. This behavior led to Scully
being placed on probation. In addition, Scully admitted during his deposition that during
the years he and Moser held the same position, Moser received higher performance
ratings.
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interfere with pension rights. Accordingly, a prima facie case requires
additional evidence suggesting that pension interference was a motivating
factor.
Id. at 523. Scully has not produced evidence showing that Allegheny Ludlum terminated
him for the purpose of interfering with his pension rights. And even if he had done so,
thus making out a prima facie case, Allegheny Ludlum would be able to show legitimate
reasons for terminating him. We have analyzed the legal significance of the facts relating
to the ADEA claim, and the same analysis applies here, in the ERISA context.
V.
For the reasons set forth above, we will affirm the District Court’s grant of
summary judgment in favor of Allegheny Ludlum and the individual defendants.
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