Karen Chambers v. The Travelers Companies

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 11-1473
___________
Karen M. Chambers, *
*
Plaintiff - Appellant, *
* Appeal from the United States
v. * District Court for the
* District of Minnesota.
The Travelers Companies, Inc., *
*
Defendant - Appellee. *
___________
Submitted: October 18, 2011
Filed: February 9, 2012
___________
Before RILEY, Chief Judge, LOKEN and BENTON, Circuit Judges.
___________
LOKEN, Circuit Judge.
Following her termination in January 2008, Karen M. Chambers commenced
this action against her former employer, The Travelers Companies, Inc., which
removed the case to federal court. Chambers appeals the district court’s1 grant of
summary judgment dismissing her claims for defamation; breach of a unilateral
contract to pay a performance bonus; failure to timely pay wages after discharge in
violation of Minn. Stat. § 181.13(a); age discrimination; and interference with her
rights to employee benefits in violation of § 510 of the Employee Retirement Income
1
The Honorable Michael J. Davis, Chief Judge of the United States District
Court for the District of Minnesota.
Security Act (ERISA), 29 U.S.C. § 1140, and the court’s denial of her motion to
continue the summary judgment proceedings. Reviewing the grant of summary
judgment de novo, and the procedural issue for abuse of discretion, we affirm.
I. The Defamation Claims
Chambers began work for Travelers’ predecessor, The St. Paul Companies, in
1987 and stayed on after the two insurers merged in 2004. In 2006, she became a
Travelers Managing Director, supervising six underwriters at the St. Paul offices.
She reported to Second Vice-President Kurt Werner, located in Dallas, Texas.
Werner reported to Homer Sandridge, Vice-President of the Professional Liability
group. The Human Resources Manager for the group of underwriters supervised by
Chambers was Michele Cady, located at Travelers headquarters in Hartford,
Connecticut. Cady reported to the Second Vice-President in charge of human
resources for bond and financial products, Gail DeAngelis, also located in Hartford.
On September 14, 2007, an underwriter supervised by Chambers called
Michele Cady to complain that Chambers had a controlling management style,
brought personal stress to the department, made inappropriate religious comments,
and sold religious items in the office. Aware that the complaint might be suspect
because this underwriter was on a performance improvement plan to correct work
deficiencies, Cady discussed the complaint with DeAngelis, who advised Cady to
speak to Jennifer Ames, the Director of Employee Relations. Ames advised Cady to
conduct a “climate survey” or “environmental assessment” of the six underwriters
supervised by Chambers to determine the merit of the complaint of poor management
and low staff morale. Ames provided Cady with a template of neutral questions to
ask employees in conducting the survey.
In early October, Cady using Ames’s template surveyed the six underwriters
about their work environment; the quality of supervision and management styles of
-2-
Werner and Chambers; co-worker and management sensitivity to gender, race, age,
religion, and employment positions; and in-office solicitations. Comments regarding
Texas-based Werner were positive, but most of the six commented negatively
regarding Chambers, describing the workplace as “dysfunctional,” team morale as
low or non-existent, and Chambers’ management style as “blame and shame” or “Dr.
Jekyll, Mr. Hyde.” They also reported that Chambers spoke frequently about religion,
and some said she sold items in the office to raise funds for missionary work, which
they felt obligated to purchase to avoid getting on her “bad side.” Cady compiled her
verbatim notes of the survey comments into a report dated October 8, 2007.
On October 10, Werner and Sandridge met with Chambers to obtain her
response to the climate survey. Cady participated by telephone. Werner summarized
the underwriters’ negative comments and invited Chambers' response. She
categorically denied the underwriters' characterizations of her performance as
Managing Director. The following day, Chambers met with Werner and Sandridge
and criticized the survey, angrily asserting that “perception is not reality” and that she
“wouldn't tolerate being implicated in harboring fear,” and demanding that Werner
and Sandridge “make sure this is taken care of.” On October 22, Werner delivered
to Chambers a “Written Behavioral Warning” noting six areas where she needed to
improve: (1) not communicating with staff in a demeaning, angry, or retaliatory
manner; (2) not discussing religious or sexual preferences with staff; (3) not soliciting
on company property; (4) communicating clearly, concisely, and respectfully; (5) not
discussing private or confidential information about employees; and (6) permitting
staff greater paid time off flexibility. Werner declined Chambers’ request that he
identify specific incidents of alleged wrongdoing and who had reported them.
On January 8, 2008, Cady, Sandridge, and Werner met with Chambers to
discuss reports that she had taken family members on business trips and had
unnecessarily delayed informing employees of a presentation assignment. Chambers
acknowledged that her daughter had attended a business dinner or outing in Las
-3-
Vegas but did not disclose that her five-year-old grandson also attended. The next
day, Travelers learned that Chambers did not report family members' presence on the
two expense forms she submitted for the dinner, which included the cost of their food
and drinks. Questioned by Travelers, Chambers’ staff reported that she had traveled
with family members previously, which they considered inappropriate. On January
21, Werner and Cady told Chambers that she was being terminated, effective
immediately, because of “continuing issues.”
Chambers alleges that Travelers agents defamed her at the October 10 meeting,
in the October 22 Written Behavior Warning, and by telling her at the January 21
meeting that she was terminated for “continuing issues.” Defamation under
Minnesota law requires proof that the alleged defamatory statement (1) was
communicated to someone other than the plaintiff, (2) was false, and (3) tended to
harm the plaintiff's reputation and lower her in the estimation of the community.
Bahr v. Boise Cascade Corp., 766 N.W.2d 910, 919-20 (Minn. 2009). Whether a
communication is actionable because it contained a provably false statement of fact
is a question of law. McClure v. Am. Family Mut. Ins. Co., 223 F.3d 845, 853 (8th
Cir. 2000), citing Geraci v. Eckankar, 526 N.W.2d 391, 397 (Minn. App.), review
denied, (Minn. Mar. 14), cert. denied, 516 U.S. 818 (1995). If a plaintiff presents
sufficient evidence of these three elements, the defendant may nonetheless be entitled
to a qualified privilege that defeats the defamation claim if its statement was “made
upon a proper occasion, from a proper motive, and [] based upon reasonable or
probable cause.” Stuempges v. Parke, Davis & Co., 297 N.W.2d 252, 256-57 (Minn.
1980). “The existence of the privilege is a matter of law for the court.” Bahr, 766
N.W.2d at 920.
The district court concluded that the statements made by Travelers agents at the
October 10 meeting and in the October 22 Written Behavior Warning were entitled
to a qualified privilege. We agree. An underwriter’s telephone complaint to Cady
gave Travelers reasonable ground to investigate staff morale in the unit managed by
-4-
Chambers. Cady surveyed the entire staff and reported the concerns they expressed
about Chambers’ performance to supervisor Werner, who then summarized the
negative comments to Chambers and sought her response. “Communications between
an employer's agents made in the course of investigating or punishing employee
misconduct are made upon a proper occasion and for a proper purpose, as the
employer has an important interest in protecting itself and the public against
dishonest or otherwise harmful employees.” McBride v. Sears, Roebuck & Co., 235
N.W.2d 371, 374 (Minn. 1975).
“A qualified privilege is abused and therefore lost if the plaintiff demonstrates
that the defendant acted with actual malice.” Lewis v. Equitable Life Assurance Soc.,
389 N.W.2d 876, 890 (Minn. 1986). “It is well-settled in Minnesota that to
demonstrate malice in a defamation action the plaintiff must prove that the defendant
made the statement from ill will and improper motives, or causelessly and wantonly
for the purpose of injuring the plaintiff.” Stuempges, 297 N.W.2d at 257. Here,
Chambers argues that Travelers lost any privilege through abuse because Cady and
Werner did not adequately investigate the truth of the underwriters’ defamatory
comments before presenting those statements to Chambers as “results” at the October
10 meeting and then reflecting those comments in the October 22 Warning. Although
abuse of the privilege is a jury issue, “pointing merely to instances in which
[Travelers] might have better conducted the investigation does not provide a basis for
a reasonable jury to [find actual malice].” Bahr, 766 N.W.2d at 925. Unlike the
employer in Wirig v. Kinney Shoe Corp., 461 N.W.2d 374, 380 (Minn. 1990), on
which Chambers relies, Travelers investigated the initial complaint regarding
Chambers' managerial deficiencies by surveying each member of her staff before
asking Chambers to respond. Though the underwriters’ survey responses were not
uniformly negative, an employer may act on reports of employee misconduct, even
if it receives conflicting reports during its investigation. See Elstrom v. Indep. Sch.
Dist. No. 270, 533 N.W.2d 51, 55 (Minn. App. 1995). On this summary judgment
record, we agree with the district court that Chambers presented no evidence from
-5-
which actual malice or ill will could reasonably be inferred and therefore Travelers
was entitled to the qualified privilege as a matter of law.2
The district court granted summary judgment on the claim based on the January
21 termination meeting because the statement that Chambers was being terminated
for “continuing issues” cannot support a defamation claim because it is “insufficiently
precise and cannot be proven false.” We agree. This statement was no more specific
or verifiable than the statement in McClure that the plaintiff was terminated for
“disloyal and disruptive activity.” 223 F.3d at 853. Moreover, this is the type of
information about an employee discharge that is entitled to the qualified privilege.
See Lewis, 389 N.W.2d at 890.
II. The Breach of Contract and Unpaid Wages Claims
For the year 2006, Travelers advised Chambers that her Total Compensation
included a bonus of $32,000. In February 2007, Travelers provided Chambers a Total
Compensation Summary for the year that included a bonus of $30,000. On
September 26, 2007, prior to Cady’s climate survey, Werner provided Chambers a
written performance review giving her positive ratings in every performance
category. Chambers alleged and argues on appeal that Travelers’ failure to pay a
$30,000 bonus for her work during 2007 breached a unilateral employment contract
that she accepted by her performance. Compare Grenier v. Air Exp. Int’l Corp., 132
F. Supp. 2d 1198, 1199-1200 (D. Minn. 2001). The district court dismissed this claim
because, as Chambers admitted in deposition testimony, all Travelers documents
2
We also conclude that the claims relating to the October 10 meeting and to the
subsequent Warning fail as a matter of law because the alleged defamatory statements
simply repeated other employees’ opinions about Chambers, see Longbehn v. City
of Moose Lake, 2005 WL 1153625, at *5 (Minn. App. May 17, 2005), and those
opinions were “not sufficiently precise or verifiable to support a claim of
defamation.” McClure, 223 F.3d at 853; see Geraci, 526 N.W.2d at 397.
-6-
“clearly state that the awarding of bonuses is within the discretion of Travelers,” and
Travelers acted within its discretion in determining “that due to her work performance
she was not entitled to a bonus in 2007.” We agree. “When a contract term leaves
a decision to the discretion of one party, that decision is virtually unreviewable.”
Brozo v. Oracle Corp., 324 F.3d 661, 667 (8th Cir.) (quotation omitted), cert. denied,
540 U.S. 1017 (2003).
Travelers' written Performance Based Compensation Policy expressly provided
that bonuses “are discretionary awards used to reward superior performance.”
Chambers herself had discretion to recommend whether the underwriters she
supervised would receive bonuses. Chambers fails to identify any document in the
record mandating the payment of performance bonuses. For example, the online
Total Compensation Summary to which she refers prominently stated that it was for
informational purposes, did not create a contract, and did not alter any existing
contract. Moreover, Travelers' policy provided that an employee would be eligible
for a bonus only if she was employed on the date bonuses were distributed.
Chambers was not employed by Travelers when it paid 2007 bonuses to employees
on February 15, 2008. See Chambers v. Metro. Prop. & Cas. Ins. Co., 351 F.3d 848,
854 (8th Cir. 2003) (applying Minnesota law).
Chambers' statutory claim for the non-payment of wages earned prior to
discharge was based entirely on Travelers’ failure to pay a bonus for her work in
2007. Therefore, this claim is foreclosed by the district court’s determination that she
was not contractually entitled to that bonus, which we have now affirmed. The
employment contract governs whether wages were “actually earned and unpaid” for
purposes of Minn. Stat. § 181.13(a). Lee v. Fresenius Med. Care, Inc., 741 N.W.2d
117, 127-28 (Minn. 2007).
-7-
III. The Age Discrimination Claim
Chambers alleged that she was discharged on account of her age in violation
of the Minnesota Human Rights Act, Minn. Stat. § 363A.08. We analyze MHRA
claims using the same standards we apply to claims under the federal Age
Discrimination in Employment Act. Lewis v. St. Cloud State Univ., 467 F.3d 1133,
1138 (8th Cir. 2006). One element of Chambers’ prima facie case is that she was
replaced by a substantially younger employee. Id. at 1136. At the time of her
discharge, Chambers was 52 years old and thus a member of the age-protected class.
The discharge decision-makers were Sandridge, age 59, and Werner, age 50. After
Chambers’ discharge, Patty McCarron, a 51-year-old Managing Director in the St.
Paul office, assumed Chambers' responsibilities, an expansion of McCarron’s
responsibilities. Some months later, Travelers perceived that McCarron was spread
too thin and hired 44-year-old Brent Rothgeb as “Managing Account Underwriter”
of the real estate underwriting group, a position one step below Chambers' former
position. Rothgeb then supervised the underwriters but did not have the business
strategy function of Managing Directors such as Chambers and McCarron.
In granting summary judgment on this claim, the district court assumed without
deciding that Chambers was replaced by a “sufficiently younger” employee to raise
an inference of age discrimination. We conclude this cautious assumption was
unwarranted. The grant of summary judgment was appropriate because Chambers
failed to show that either of her replacements was “sufficiently younger.” See Schiltz
v. Burlington N. R.R., 115 F.3d 1407, 1412-13 (8th Cir. 1997); accord Morgan v.
A.G. Edwards & Sons, Inc., 486 F.3d 1034, 1044-45 (8th Cir. 2007); Grosjean v. First
Energy Corp., 349 F.3d 332, 338-39 (6th Cir.) (collecting cases), cert. denied, 541
U.S. 1010 (2003).
The district court concluded that Travelers articulated a non-discriminatory
reason for Chambers’ discharge -- her performance deficiencies -- and that Chambers
-8-
failed to present evidence that this reason was, in fact, a pretext for age
discrimination. The court explained, “Chambers has not supplied any evidence, other
than her own speculation, that age was a factor in her discharge.” We agree this, too,
was a proper ground on which to grant summary judgment.
Chambers bore the burden of showing a material question of fact regarding
pretext, typically shown by evidence that the employer’s “explanation is unworthy
because it has no basis in fact,” or that “a prohibited reason more likely motivated”
the adverse employment action. Torgerson v. City of Rochester, 643 F.3d 1031, 1047
(8th Cir.) (en banc) (quotation omitted), cert denied, 132 S. Ct. 513 (2011). She
argues that neither Werner nor Sandridge had ever used the unfair environmental
assessment process that undercut her credibility with staff. But that assessment was
carried out by human resources professionals, using a previously devised survey, and
its results were then reported to Werner and Sandridge for appropriate action. There
is no evidence that these decision-makers contemplated terminating Chambers prior
to the negative comments by her subordinates. Chambers complains that Travelers
did not follow its declared warning policies, but this does not create a reasonable
inference that age was the reason for her eventual discharge. See Haas v. Kelly
Servs., 409 F.3d 1030, 1036 (8th Cir. 2005). She further complains that Travelers
exaggerated her inappropriate conduct at the Las Vegas dinner. But this does not
support a claim of pretext because she failed to refute Travelers’ conclusion that she
inappropriately brought family members to this business function and improperly
sought reimbursement for their expenses. Viewing the disputed facts in this
voluminous record most favorably to Chambers, we conclude the district court
properly granted summary judgment dismissing her age discrimination claim.
IV. The ERISA Claims
Section 510 of ERISA prohibits the discharge of an employee “for the purpose
of interfering with the attainment of any right to which [the employee] may become
-9-
entitled under [an employee benefit] plan.” 29 U.S.C. § 1140. Chambers appeals the
dismissal of her claims that Travelers, by discharging her, wrongfully interfered with
her rights under its severance plan and pension benefits plan. The severance plan
claim requires little discussion. The Travelers plan expressly provided that an
employee discharged for cause is ineligible for severance benefits. Thus, if Chambers
was terminated for cause, she had no further rights under the plan. If she was not
validly terminated for cause, she had a claim for severance benefits under the plan.
In either event, no § 510 “interference” claim will lie.
To prevail on a § 510 claim, Chambers must show that Travelers specifically
intended to interfere with her right to plan benefits. See Pendleton v. QuikTrip Corp.,
567 F.3d 988, 992 (8th Cir. 2009). To support the claim of interference with her right
to future pension benefits, Chambers cites to statements by Travelers following its
merger with The St. Paul Companies in 2004 that it intended to save $350M by
eliminating 3,000 employees. But that remote statement does not preclude summary
judgment because a bona fide reduction-in-force is a legitimate, nondiscriminatory
reason for discharge that does not give rise to a § 510 interference claim. Regel v. K-
Mart Corp., 190 F.3d 876, 881 (8th Cir. 1999). Moreover, Chambers was terminated
for cause years later. She presented no evidence that this specific employment action
long after the merger was a pretext for intentional interference with her right to attain
pension benefits in addition to those benefits that were vested at the time of her
discharge. The district court correctly concluded that Chambers failed to establish
a prima facie case of employee benefit plan interference under § 510.
V. The Procedural Issue
Finally, Chamber argues the district court erred when it denied her motion for
a continuance of the pending summary judgment proceedings under Rule 56(f) of the
Federal Rules of Civil Procedure. Chambers filed this motion five months after
discovery expired, submitting an affidavit broadly requesting receipt of “all relevant
-10-
information and documents not timely produced and/or improperly withheld” by
Travelers. Rule 56(f) -- recodified “without substantial change” as Rule 56(d)
effective December 1, 2010 -- authorizes a district court to defer considering a motion
for summary judgment if a party opposing the motion “shows by affidavit or
declaration that, for specified reasons, it cannot present facts essential to justify its
opposition.” The district court denied the motion to continue, and resolved the
summary judgment motion on an extensive discovery record, because Chambers did
not identify specific facts that further discovery might uncover and show how those
facts would rebut Travelers’ showing of the absence of genuine issues of material
fact. As this is the standard prescribed by the Rule, there was no abuse of discretion.
See Ray v. Am. Airlines, Inc., 609 F.3d 917, 923 (8th Cir. 2010) (standard of review).
The judgment of the district court is affirmed.
______________________________
-11-