PUBLISH
UNITED STATES COURT OF APPEALS Filed 5/1/96 TENTH CIRCUIT
ROBERT S. FURR, LESLIE WOOSLEY, BERNARD E. OZINGA,
Plaintiffs - Appellees, No. 95-6181 vs.
SEAGATE TECHNOLOGY, INC.,
Defendant - Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF OKLAHOMA (D.C. No. CIV-93-939-R)
Gary C. Pierson (Tony G. Puckett and Rochelle L. Huddleston with him on the brief), of Lytle Soulé & Curlee, Oklahoma City, Oklahoma, for Defendant-Appellant.
Mark Hammons of Hammons & Associates, Oklahoma City, Oklahoma, for Plaintiffs- Appellees.
Before BALDOCK, McWILLIAMS and KELLY, Circuit Judges.
KELLY, Circuit Judge.
Plaintiffs-Appellees Robert S. Furr, Leslie Woosley, and Bernard E. Ozinga allege
that their employment with Defendant-Appellant Seagate Technology, Inc. was
terminated because of their age in violation of the Age Discrimination in Employment Act (“ADEA”), 29 U.S.C. §§ 621-34, and Oklahoma public policy.1 The case was tried
to a jury, which returned a verdict in favor of the Plaintiffs. Seagate filed a motion for
judgment as a matter of law or a new trial, which was denied by the district court. This
appeal followed.
I. Background
Seagate designs, manufactures and markets hard disk drives for computer systems.
It has plants in 17 countries and over 30,000 employees worldwide. Seagate commenced
operations in Oklahoma City on October 1, 1989, after purchasing an existing facility
from another disk drive company. The Oklahoma City plant employed approximately
2,000 people.
In June 1991, Seagate’s senior management determined that certain cost-
containment measures would have to be taken to address an anticipated decline in profit
margins. These measures included a company-wide reduction-in-force (“RIF”). The RIF
was not undertaken as a desperate measure, but rather as a strategic business decision
aimed at improving the company’s position in the highly competitive hard disk drive
market.
The initial RIF occurred in July 1991, with a second, smaller RIF in August 1991.
1 Plaintiffs concede that the intervening case of List v. Anchor Paint Manufacturing Co., 910 P.2d 1011 (Okla. 1996), disallows their state law claims. In List, the Oklahoma Supreme Court held that Oklahoma does not recognize a wrongful discharge claim predicated on Oklahoma public policy where the plaintiff has a statutory cause of action. Id. at 1013.
-2- Approximately 1,200 employees were laid off from Seagate nationwide, including fifty-
four from Oklahoma City.
Plaintiffs Furr, Woosley, and Ozinga were employed by Seagate at its Oklahoma
City plant, and all three were ultimately selected for the RIF. All three worked in separate
departments in a hierarchy of about 240 employees called Design Engineering headed by
vice-president Miran Sedlacek. Design Engineering included a variety of diverse talents
and disciplines, and the three Plaintiffs worked for different managers and performed
vastly different jobs.
Mr. Furr, 53, was a senior drafter who performed electrical drafting. James Becker
was Furr’s immediate supervisor. Mr. Becker reported to Bill Diffin, Director of
Engineering Services, who in turn reported to Mr. Sedlacek.
Mr. Woosley, 58, was an engineering support specialist who worked in the photo
lab, photocopying artwork master prints for other employees to use in making printed
circuit boards. Stan Young was Mr. Woosley’s immediate supervisor. Mr. Young, like
Mr. Becker, also reported to Mr. Diffin.
Mr. Ozinga, 62, was a senior consulting mechanical engineer who worked on the
mechanical areas of disk drive design. David West, Director of Advanced Technology
and Concepts, was Mr. Ozinga’s immediate supervisor, and Mr. West reported directly to
Mr. Sedlacek.
In early July, 1991, Mr. Sedlacek was informed about the planned RIF and was
-3- told that the reduction would be 15% for his organization. Mr. Sedlacek called a meeting
of the five directors under him, including Mr. Diffin and Mr. West, and instructed them to
cut 15% of the employees in their respective groups. Mr. Sedlacek did not tell his
directors who to select, nor did he personally select any employees for the RIF.
After the directors talked to their managers, and the managers and supervisors
made their selections, Mr. Sedlacek held two meetings with all of his directors to discuss
their selections. The focus of these meetings was to ensure that the functions selected
would cause the least harm to the company.
A. Mr. Furr’s Selection
After meeting with Mr. Sedlacek, Mr. Diffin met with the five managers under
him, including Mr. Becker and Mr. Young, to inform them of the RIF. Mr. Diffin
explained that each department would still have the same amount and type of work after
the RIF and instructed his managers to select those that would least harm their
department’s ability to continue their operations. Each manager was required to select
only employees from his own department. Mr. Diffin informed Mr. Becker that he would
have to select two employees for the RIF.
Mr. Becker supervised 14 employees, 9 engineers and 5 technicians. He
determined that his two selections had to be from the technicians because the engineers
could perform the work of the technicians, but the converse was not true. Mr. Becker
-4- then examined the tasks that each of the technicians was performing. Two were
preparing printed circuit board layouts, another was performing several tasks, including
new document production and photo lab and microfilm backup, and Mr. Furr and another
technician, Modesto Adoptante, 58, were making engineering change orders and updating
upgrades. In order to maintain people performing all of the various tasks, Mr. Becker
selected one of the two technicians preparing circuit board layouts for the RIF and
selected Mr. Furr over Mr. Adoptante. Mr. Becker testified that the selection decision
was entirely his and that he kept Mr. Adoptante because he felt Mr. Adoptante was more
productive than Mr. Furr. Mr. Becker based his selections exclusively on job elimination
and productivity. After his layoff, Mr. Furr’s job duties were performed by Mr.
Adoptante and later absorbed by others in Mr. Becker’s group; no one was transferred
into Mr. Furr’s former position or hired to take his place.
B. Mr. Woosley’s Selection
Mr. Young also learned of the RIF in the early July meeting with Mr. Diffin, and
Mr. Diffin told Mr. Young that he would have to select one person for the RIF. Mr.
Young selected a temporary employee who would eventually depart anyway. It was
unclear at the time whether the termination of a temporary employee would count toward
the RIF requirements. Although the temporary employee was approved for the July RIF,
Mr. Young reviewed his department to determine who he would pick if another selection
-5- was necessary.
Mr. Young’s department consisted of nine employees, including the temporary.
Three were scientists with degrees in chemistry; three employees, including the
temporary, worked in the SMT lab; one independently operated the printed circuit lab;
one maintained the specialized inventory of components used in the engineering
department; and Mr. Woosley ran the photo lab. Mr. Young determined that the
scientists, with their specialized knowledge, were indispensable, as were the employees
operating the printed circuit lab and maintaining the specialized inventory. Mr. Young
did not think that he could operate the SMT lab with only a single person (after losing the
temporary), making the two remaining SMT lab employees vital. Thus, Mr. Young
reasoned that Mr. Woosley was the next most expendable individual, behind the
temporary, especially because other people under Mr. Diffin’s management umbrella
could, and had, performed Mr. Woosley’s job in the photo lab.
Shortly after the July RIF, Mr. Diffin called a meeting of his managers, including
Mr. Young, and announced that the group needed to lose another person. Mr. Diffin told
Mr. Young that his department would lose the additional person, and Mr. Young agreed
with that decision because every other department under Mr. Diffin had lost a permanent
employee while he had only lost a temporary. Mr. Young selected Mr. Woosley, focusing
exclusively on position elimination. Mr. Woosley’s photo lab position was eliminated,
although the photo lab duties still needed to be performed. A four-person, weekly
-6- rotation was set up to handle Mr. Woosley’s former photo lab responsibilities, and this
rotation system lasted two years. No one was hired into Mr. Woosley’s former position.
C. Mr. Ozinga’s Selection
Mr. West, Mr. Ozinga’s manager, first learned of the RIF at the early July meeting
with Mr. Sedlacek. Mr. West’s organization consisted of eight specialized departments
and developed integrated circuits. The technical employees in Mr. West’s group were all
electrical engineers, except Mr. Ozinga who was a mechanical engineer. Mr. Ozinga and
one other consulting engineer reported directly to Mr. West.
Mr. West attempted to determine which specialities could be selected that would
least impact his organization. He met with his managers and developed a RIF list, which
included Mr. Ozinga because he was underutilized. Mr. West testified that as a
mechanical engineer, Mr. Ozinga was an unnecessary luxury for his group, and he was
unable to keep Mr. Ozinga busy, relying on other departments to provide work for him.
In part due to his underutilization, Mr. Ozinga was considered a moderate to low
performer, ranked among the bottom 15% of employees in Mr. West’s department in
performance.
Mr. West and the other directors under Mr. Sedlacek met with Mr. Sedlacek to
discuss the people selected for the RIF. At that meeting Mr. West argued for the retention
of some of his employees, including Mr. Ozinga. Mr. West succeeded in having one
-7- employee, Mr. Jantz, 57, retained because there were other functions he could perform,
but Mr. West could not convince the other managers to matriculate Mr. Ozinga into their
departments. The other consulting engineer, five years older than Mr. Ozinga, was not
selected for the RIF.
II. Waiver
As an initial matter, Plaintiffs contend that Seagate has waived its right to
appellate review by failing to include, among other things, the motion or brief for
judgment as a matter of law, a new trial, or remittitur. “When the record on appeal fails
to include copies of the documents necessary to decide an issue on appeal, the Court of
Appeals is unable to rule on that issue.” United States v. Vasquez, 985 F.2d 491, 494
(10th Cir. 1993). Seagate did include the entire trial transcript, as well as the district
court’s order denying its motion for judgment as a matter of law, or in the alternative, for
a new trial, and for remittitur. Because Seagate’s appeal is based upon challenges to the
evidence and to the sufficiency of the evidence, this is a sufficient record to allow
appellate consideration of the issues raised. See 10th Cir. R. 10.1.1, 10.3. In any event,
Seagate supplemented the record on appeal with the motions and briefs, and we discern
no prejudice to the appellees from this submission.
III. Judgment As a Matter of Law
-8- Seagate contends that it should have been granted judgment as a matter of law
because Plaintiffs failed to present sufficient evidence to meet their burden of proving
intentional age discrimination. We review the denial of a motion for judgment as a matter
of law de novo. Considine v. Newspaper Agency Corp., 43 F.3d 1349, 1363 (10th Cir.
1994). We construe the evidence and inferences most favorably to the nonmoving party.
Id.
Seagate concedes that Plaintiffs met their initial burden of proving a prima facie
case under the McDonnell Douglas standard. See McDonnell Douglas Corp. v. Green,
411 U.S. 792, 802 (1973); Ingels v. Thiokol Corp., 42 F.3d 616, 621 (10th Cir. 1994)
(setting out the prima facie elements in the reduction-in-force context). However, the
existence of a prima facie case does not necessarily preclude judgment as a matter of law
against the Plaintiffs. Cf. Ingels, 42 F.3d at 621-23. As we stated in Fallis v. Kerr-
McGee Corp., 944 F.2d 743, 744 (10th Cir. 1991):
[A]fter a full trial on the merits, the sequential analytical model adopted from McDonnell Douglas . . . drops out and we are left with the single overarching issue whether plaintiff adduced sufficient evidence to warrant a jury’s determination that adverse employment action was taken against him on the basis of age.
Seagate has advanced a legitimate, nondiscriminatory reason for its decision to lay off the
Plaintiffs, namely the company-wide reduction-in-force. The fact finder may only infer
discrimination if the Plaintiffs produce evidence that the Defendant’s proffered
explanation is pretextual and unworthy of credence. Ingels, 42 F.3d at 621-22.
-9- The Plaintiffs in this case attempted to prove discrimination by attacking the RIF
as pretextual. Plaintiffs do not question the existence of a company-wide RIF, but they
challenge the necessity of the RIF. Plaintiffs presented much evidence tending to show
Seagate’s financial health and profitability, including evidence that Seagate was hiring
shortly before and after the RIF.
Plaintiffs’ attempt to use Seagate’s pre- and post-RIF hirings as evidence of
pretext ignores the timing of the hirings. The uncontroverted testimony revealed that no
one at Seagate’s Oklahoma City plant learned of the RIF until late June 1991, a few
weeks before it occurred. The fact that Seagate’s managers were hiring before they
learned of the RIF is irrelevant to proving that the RIF was pretextual. Accord Viola v.
Phillips Medical Sys. of North America, 42 F.3d 712, 718 (2d Cir. 1994) (employee’s
first adverse performance review occurred on the eve of a RIF, but this was not evidence
of pretext because the supervisor was unaware of the impending RIF at the time of the
review).
Plaintiffs’ evidence of Seagate’s post-RIF hirings fails to show pretext because the
people hired were not similarly situated to the Plaintiffs. The evidence reveals that
Seagate did not hire anyone for two months after the RIF, and then after hiring a single
49-year-old for a job dissimilar to the Plaintiffs’, did not hire anyone for another two
months. Seagate did hire several people beginning in mid-November 1991, more than
four months after the RIF, but Plaintiffs’ evidence reveals that the newly hired individuals
- 10 - were not hired into Plaintiffs’ positions or positions comparable to theirs.2 Most of the
newly hired individuals were hired for the direct labor pool, which was not subject to the
RIF.3 The fact that a company is hiring accounting clerks shortly after reducing its
engineering workforce does not indicate that the engineering RIF is pretextual. Cf. Cone
v. Longmont United Hosp. Ass’n, 14 F.3d 526, 532 (10th Cir. 1994) (“To make a
comparison demonstrating discrimination, the plaintiff must show that the employees
were similarly situated.”).
Plaintiffs attempted to attack the RIF as pretextual by challenging its necessity. To
that end, Plaintiffs presented much evidence tending to show Seagate’s financial health
and profitability. However, as we have noted before, the wisdom of a RIF is not for a
court or jury to decide. A RIF is a business decision, and “[t]he ADEA is not a vehicle
for reviewing the propriety of business decisions.” Faulkner v. Super Valu Stores, Inc., 3
F.3d 1419, 1426 (10th Cir. 1993).
Plaintiffs attempt to rely on Denison v. Swaco Geolograph Co., 941 F.2d 1416
(10th Cir. 1991), for the proposition that business judgment may be challenged by
2 Mr. Ozinga claims that a mechanical engineer was hired on July 15, 1991, but the evidence reveals that the person hired was actually a manufacturing advisory engineer, not a mechanical engineer. There was no evidence that this position was similar to Mr. Ozinga’s or that Mr. Ozinga was qualified for this position. 3 Seagate classified its employees as either “direct labor” or “indirect labor.” Indirect labor included employees performing concept and design work, such as engineering. Direct labor included “hands on” type work, such as facilities maintenance. It was undisputed that only indirect labor employees were at risk during the July 1991 RIF.
- 11 - financial evidence. In Denison, the company attempted to justify Plaintiff’s termination
based on sales figures indicating that Plaintiff’s division was less profitable than another.
The Plaintiff showed this explanation unworthy of credence with evidence that neither the
Plaintiff nor his replacement was involved in sales, the sales figures were not truly
comparative, the company had strong financial potential, and the company considered the
higher employment cost of older employees in deciding who to retain. The Plaintiff in
Denison presented considerable evidence of pretext other than mere evidence of financial
health. Denison, 941 F.2d at 1421. “‘[T]his court will not second guess business
decisions made by employers, in the absence of some evidence of impermissible
motives.’” Faulkner, 3 F.3d at 1427 (quoting Lucas v. Dover Corp., Norris Div., 857 F.2d
1397, 1403-04 (10th Cir. 1988)). Financial evidence suggesting that a decision, in
hindsight, may not have been prudent is not evidence of improper motive; the ADEA is
not violated by erroneous or even illogical business judgment. Cf. Sanchez v. Phillip
Morris Inc., 992 F.2d 244, 247 (10th Cir. 1993) (Title VII case).
Plaintiffs also seek to infer pretext from the lack of a formal RIF plan and
instructions. However, it was undisputed that the written RIF criteria were position
elimination, performance, potential, and seniority, in that order. Further, the manner in
which a company chooses to conduct a RIF is within the company’s sound business
discretion, and Plaintiffs have failed to adduce any evidence that the RIF criteria were a
pretext for discriminatory motive. Cf. Ingels, 42 F.3d at 623 (company may alter the rules
- 12 - it uses for conducting a RIF).
The Plaintiffs in this case produced statistical evidence purportedly showing a
correlation between age and discharge. While statistical evidence may create an inference
of discrimination, the evidence may be so flawed as to render it insufficient to raise a jury
question. Fallis, 944 F.2d at 746. In this case, Plaintiffs’ statistical evidence is so flawed
because it failed to compare similarly situated individuals. Plaintiffs’ statistics grouped
all employees together regardless of specialty or skill and failed to take into account
nondiscriminatory reasons for the numerical disparities. “‘A plaintiff’s statistical
evidence must focus on eliminating nondiscriminatory explanations for the disparate
treatment by showing disparate treatment between comparable individuals.’” Cone, 14
F.3d at 532 (quoting Fallis, 944 F.2d at 746) (emphasis in original). Statistical evidence
which fails to properly take into account nondiscriminatory explanations does not permit
an inference of pretext. Rea v. Martin Marietta Corp., 29 F.3d 1450, 1456 (10th Cir.
1994).
Plaintiffs contend that Seagate used subjective criteria in selecting individuals for
the RIF and that the use of subjective criteria creates an inference of discrimination. See
Burrus v. United Telephone Co., 683 F.2d 339, 342 (10th Cir.), cert. denied, 459 U.S.
1071 (1982). Specifically, Plaintiffs take issue with the use of “potential” as a selection
criteria. Plaintiffs argue that “potential” is subjective and that the use of “potential” as a
criteria disparately impacts older employees. We find these contentions unpersuasive.
- 13 - First, even if “potential” is somewhat subjective, the use of subjective criteria does
not suffice to prove intentional age discrimination. Pitre v. Western Elec. Co., 843 F.2d
1262, 1272 (10th Cir. 1988). Second, any disparate impact that the use of “potential”
may have is insufficient to state a claim under the ADEA because disparate impact claims
are not cognizable under the ADEA. Ellis v. United Airlines, Inc., 73 F.3d 999, 1007
(10th Cir. 1996).4 The plain language of the ADEA recognizes that disparate impact may
be due to “reasonable factors other than age.” 29 U.S.C. § 623(f)(1); see Ellis, 73 F.3d at
1008. Future job potential is certainly something that a company might legitimately want
to consider in its RIF decision. Indeed, Congress has recognized potential as a legitimate
factor distinct from age; Congress enacted the ADEA to combat “the setting of arbitrary
age limits regardless of potential for job performance.” 29 U.S.C. § 621(a)(2) (emphasis
added). Simply because there may be a correlation between age and potential does not
mean that potential cannot be used as a selection criteria. See Hazen Paper Co. v.
Biggins, 507 U.S. 604, 611-12 (1993).
Further, in this case, the uncontroverted testimony of the various managers who
chose the Plaintiffs for the RIF shows that the managers looked only to job elimination
and performance, not potential, in selecting the Plaintiffs. All three managers responsible
for the terminations explained in detail why they believed Plaintiffs’ positions were the
4 While disparate impact may be evidence of intentional discrimination in certain cases, Hiatt v. Union Pacific Railroad Co., 65 F.3d 838, 842 n.4 (10th Cir. 1995), Plaintiffs failed to present evidence that “potential,” as interpreted by Seagate’s managers, was correlated to age. See Rea, 29 F.3d at 1458.
- 14 - least important to their departments, and there was no suggestion that “potential” ever
entered into the decision. See Rea, 29 F.3d at 1458.
Plaintiffs contend that pretext can be inferred from the fact that not every
department was subjected to the RIF. Specifically, Plaintiffs point to eight
“predominantly younger” work groups under Sedlacek which were unaffected by the RIF.
The undisputed testimony reveals that Sedlacek told his five subordinate directors to
make selections from their departments for the RIF and that the individual directors then
made their decisions after assessing the needs of their various groups. The fact that
Sedlacek’s managers choose to leave some work groups intact does not necessarily
indicate pretext. Sedlacek’s managers were asked to make business judgments as to
which employees they could best do without, and the fact that some departments were
unaffected may be a natural consequence of the greater perceived importance of certain
departments. Plaintiffs have not produced any evidence indicating that the unaffected
departments were similarly situated or performed identical functions to the affected
departments, or that the departments were selected because of age. In the absence of any
evidence of an illegal ulterior motive, courts and juries cannot presume to question the
business judgment of company managers. See Faulkner, 3 F.3d at 1426; Sanchez, 992
F.2d at 247.
Plaintiffs claim that they were better qualified than other younger retained
employees, allowing an inference of pretext. However, both Mr. Ozinga and Mr.
- 15 - Woosley were selected for the RIF solely on the basis of position elimination, making
their qualifications irrelevant. Mr. Woosley disputes the fact that his position was
eliminated because his photo lab responsibilities were still performed after his layoff.
However, the test for position elimination is not whether the responsibilities were still
performed, but rather whether the responsibilities still constituted a single, distinct
position. Mr. Woosley’s former responsibilities were divided up and absorbed by a four-
person rotation of existing employees, and no new person took over his former
responsibilities.
Mr. Furr was selected on the basis of position elimination and performance,
making his qualifications relevant only in relation to other employees performing the
same functions. Mr. Furr’s manager, Mr. Becker, compared Mr. Furr to the other
employee in the department performing the same duties and determined that the other
employee was a superior performer. It is the manager’s perception of the employee’s
performance that is relevant, not plaintiff’s subjective evaluation of his own relative
performance. Branson v. Price River Coal Co., 853 F.2d 768, 772 (10th Cir. 1988).
Plaintiffs rely heavily on Seagate’s 1992 salary forecasts, arguing that the forecasts
were based on the same criteria used in the RIF and thus the employees at the bottom of
the forecast should have been laid off first. However, as the Plaintiffs’ own witness
conceded, the salary forecasts fail to take into account the possibility of position
elimination. Further, Plaintiffs attempt to rely on salary forecasts which combine persons
- 16 - of various occupations from different departments, ignoring the uncontroverted testimony
that managers were only allowed to select individuals from within their own departments.
Plaintiffs presented no evidence that they were similarly situated to the other employees
on the forecasts. The undisputed fact that each manager could only select from
individuals in his own department negates the value of an interdepartmental ranking in
showing pretext. Considering only the individuals in each manager’s individual
department, each plaintiff was ranked the lowest of those similarly situated to him.
Finally, as circumstantial evidence of pretext, Plaintiffs claim that Sedlacek, West,
and Diffin all ranked their subordinate managers in order of age. While older managers
were ranked lower on a whole by these three managers, the uncontroverted testimony was
that age was not a factor in the rankings nor were ages included on the rankings.
Plaintiffs have produced absolutely no evidence that age was a factor in these rankings,
and Plaintiffs each concede that they did not believe their managers would intentionally
discriminate on the basis of age. A statistical coincidence does not rise to the level of
pretext.
After a careful review of the record in this case, we have determined that even in
the light most favorable to the them, Plaintiffs have failed to produce evidence sufficient
to demonstrate pretext and to carry their burden of proving intentional age discrimination.
Accordingly, we hold that the district court erred in denying Seagate’s motion for
judgment as a matter of law. Because we find that judgment as a matter of law should be
- 17 - granted in favor of the Defendant, we need not reach the other issues raised in this appeal.
REVERSED and REMANDED for entry of judgment in accordance with this
opinion.
- 18 -