In Re: CARNEGIE CENTER ASSOCIATES, Debtor. Deborah RHETT, Appellant, v. CARNEGIE CENTER ASSOCIATES

129 F.3d 290, 214 B.R. 290, 1997 U.S. App. LEXIS 30281, 72 Empl. Prac. Dec. (CCH) 45,074, 75 Fair Empl. Prac. Cas. (BNA) 331, 1997 WL 693036

• Court: Court of Appeals for the Third Circuit
• Decided: October 31, 1997
• Docket: 96-5566
• Status: Published

Opinions

GREENBERG, Circuit Judge.

OPINION OF THE COURT

This case comes on before this court on appeal from the district court’s order affirming a bankruptcy court order expunging the claim of the appellant Deborah Rhett, a black female, which arose out of the termination of her employment when her employer, appellee Carnegie Center Associates (Carnegie), abolished her position. The bankruptcy court had subject matter jurisdiction under 28 U.S.C. § 157(b)(2)(B), (0) and 28 U.S.C. § 1334(b). The district court had appellate jurisdiction over the bankruptcy court’s order pursuant to 28 U.S.C. § 158. We have jurisdiction under 28 U.S.C. § 1291, 28 U.S.C. § 158(d), and 42 U.S.C. § 2000e-5(j).

A. FACTUAL AND PROCEDURAL HISTORY

The facts in the case were developed at the trial of the adversary proceeding in the bankruptcy court. Rhett began working for Carnegie, a real estate company Allan Landis owned and controlled, as a temporary secretary in April 1989. She became a full-time permanent secretary in Carnegie’s Accounting/Finanee Department on July 17, 1989, and received a salary increase of $1,500 in January 1990 based on her satisfactory performance.

In June 1990, Rhett informed her supervisors and coworkers that she was pregnant. When she told Keith Gormisky, the controller, and Gary Turndorf, the chief financial officer and counsel, of her pregnancy both asked if she was going to get married. Turndorf commented that being a single parent was difficult, and Rhett claimed that Gormisky said that getting married was: “in society’s eyes ... the right thing to do.” Nevertheless, Turndorf testified that the fact that Rhett was unmarried played no role in Carnegie’s later decision to abolish her position. Rhett also claimed that Gormisky became irate with her just before she left on maternity leave and stated that she was on “thin ice.” The bankruptcy court, apparently attributing this comment to Turndorf, found it related to his view of the quality of Rhett’s work.

Rhett circulated a memo to the managerial officers (including Landis, Turndorf and Gormisky) on December 18, 1990, stating that she planned to be on maternity leave from December 21, 1990, until about April 15, 1991. Carnegie hired a temporary secretary to fill in while she was gone. Carnegie did not have a formal maternity leave policy, but Turndorf testified that its practice- was to “try and hold it open for them if we could” so that “[w]hen they wanted to come back, if they contacted us and there was something open that was suitable, we would offer it to them.” See bankruptcy court opinion at 5-6 (discussing two employees who left on maternity leave and subsequently returned to the same or similar positions).

Carnegie had experienced financial difficulties prior to Rhett’s departure that worsened while she was gone, forcing it to make staff cutbacks to decrease costs. Consequently, just before Rhett originally had planned to return, Carnegie eliminated several positions, including Rhett’s secretarial position, and terminated several employees, including her supervisor, Geoff Hammond. On March 26, 1991, Gormisky wrote Rhett to tell her that her position had been eliminated.¹ Turndorf testified that Carnegie did not make a performance-based evaluation as to which secretary’s employment it should terminate because it did not consider Rhett an employee at that time and it was easy to abolish her former position by not hiring any more temps, thus reducing the number of secretaries from four to three. At that time Rhett was still away from work because she was under medical care (counseling) for post-par-tum depression, which she continued until June of 1991. When Rhett called Gormisky after receiving the letter, he reiterated that her position had been abolished. She asked about two other positions with Carnegie and was told they were not available to her. In fact, Carnegie did not interview Rhett, or consider hiring her, for any other position.

Rhett filed a suit in the district court under Title VII and the New Jersey Law Against Discrimination against Carnegie on November 26, 1993, alleging discrimination on the basis of her race, gender, and marital status.² The district court action was automatically stayed because Carnegie was undergoing bankruptcy reorganization. Thus, Rhett pursued the matter by filing a proof of claim with the bankruptcy court on February 19,1994. Thereafter the district court terminated the district court action without prejudice and the case continued as an adversary proceeding in the bankruptcy court. The bankruptcy court found in Carnegie’s favor after a three-day bench trial. It held that Carnegie had to reduce costs because of financial difficulties and that it eliminated staff at both the management and support levels. The court held that Carnegie abolished Rhett’s position for the legitimate nondiscriminatory reason that she was away from work, and not because of discrimination on the basis of race, gender or pregnancy. The court further held that she was not qualified for any of the other positions for which she asserted Carnegie should have interviewed her. The district court affirmed in an opinion and order entered August 6, 1996, holding that the bankruptcy court’s factual findings were not clearly erroneous and these findings “compelled the conclusion that the secretarial position held by appellant was abolished for legitimate, non-discriminatory reasons.” Rhett then appealed to this court.

The main issue on this appeal is whether an employee’s absence on maternity leave can be a legitimate nondiscriminatory reason for her termination. Inasmuch as the district court sat as an appellate court, we exercise plenary review of its decision. Universal Minerals, Inc. v. C.A. Hughes & Co., 669 F.2d 98, 101-102 (3d Cir.1981). Findings of fact by the bankruptcy judge, however, are only reversible if clearly erroneous. Bankruptcy Rule 8013.

B. PREGNANCY, RACIAL AND GENDER DISCRIMINATION

On this appeal Rhett claims that Carnegie terminated her employment because of her pregnancy and on account of her race and gender in violation of Title VII and the New Jersey Law Against Discrimination. We confine our discussion to Title VII because her state law claims are analyzed in the same way as her Title VII claims. See Marzano v. Computer Science Corp., 91 F.3d 497, 502 (3d Cir.1996). Indeed, Rhett apparently recognizes this point because she does not cite a single New Jersey state court opinion in either of her briefs on this appeal.

Title VII prohibits employment discrimination based on an individual employee’s sex. 42 U.S.C. § 2000e-2(a). The Pregnancy Discrimination Act (“PDA”), a 1978 amendment to Title VII, states:

The terms ‘because of sex’ or ‘on the basis of sex’ include, but are not limited to, because of or on the basis of pregnancy, childbirth, or related medical conditions; and women affected by pregnancy, childbirth, or related medical conditions shall be treated the same for all employment-related purposes ... as other persons not so affected but similar in their ability or inability to work____

42 U.S.C. § 2000e(k). There is employment discrimination whenever an employee’s pregnancy is a motivating factor for the employer’s adverse employment decision. 42 U.S.C. § 2000e-2(m).

The bankruptcy and district courts analyzed Rhett’s claim as being based on circumstantial evidence implicating the burden shifting framework of McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973). In a Title VII ease such as this one involving a reduction in force, in order to make out a prima facie case the plaintiff must show that (1) she belonged to a protected class, (2) she was qualified for the position from which she was terminated, (3) she was terminated and (4) persons outside of the protected class were retained. See Armbruster v. Unisys Corp., 32 F.3d 768, 777 (3d Cir.1994). While neither court made specific reference to the applicability of the modified McDonnell Douglas framework in reduction in force situations, the record clearly establishes that Carnegie did reduce its force, so we will apply the appropriate framework. Once the plaintiff establishes a prima facie case, the burden shifts to the defendant to articulate a legitimate non-diseriminatory reason for the plaintiffs termination. Texas Dep’t of Community Affairs v. Burdine, 450 U.S. 248, 252-53, 101 S.Ct. 1089, 1093, 67 L.Ed.2d 207 (1981). If the defendant articulates such a reason, the plaintiff then must prove that the facially legitimate reason was a pretext for a discriminatory motive. Id.³

The bankruptcy and district courts held that Rhett did not establish a prima facie case. We disagree with this conclusion but are satisfied that the courts’ error is harmless because the bankruptcy court considered the issues relevant to a reduction in force analysis at a trial and made the requisite findings for such an analysis. Thus, insofar as this case involves a reduction in force, we focus on Carnegie’s reason for terminating Rhett’s employment.

This ease largely boils down to a dispute over one issue: whether terminating an employee because she is absent on maternity leave is a violation of the PDA. The bankruptcy and district courts found that Carnegie eliminated Rhett’s position because she was not at her place of employment at that time, not because of her pregnancy. Carnegie argues, and the bankruptcy and district courts found at least implicitly, that Rhett was not employed by Carnegie at the time Carnegie eliminated her position. Rhett asserts that she was an employee on unpaid leave at that time. Carnegie had no formal maternity leave policy, but it did have a practice of allowing employees to return from leave to the same or similar position if one was available. It is undisputed that Carnegie maintained Rhett’s medical insurance until it eliminated her position on March 26, 1991. Therefore, it appears that Rhett was an employee of Carnegie on an unpaid leave of absence who sought reinstatement. We need not, however, definitely so determine because even assuming that Carnegie still employed Rhett when it abolished her position, under the Armbruster reduction in force framework, she is not entitled to relief.

Regulations promulgated under Title VII provide:

Disabilities caused or contributed to by pregnancy, childbirth, or related medical conditions, for all job related purposes, shall be treated the same as disabilities caused or contributed to by other medical conditions____ Written or unwritten em-

ployment policies and practices involving matters such as the commencement and duration of leave ... [and] reinstatement ... shall be applied to disability due to pregnancy ... on the same terms and conditions as they are applied to other disabilities.

29 C.F.R. § 1604.10(b). The interpretive question and answer section accompanying the regulation specifies that an employer must hold open the job of a woman absent because of pregnancy “on the same basis as jobs are held open for employees on sick or disability leave for other reasons.” 29 C.F.R. Pt. 1604 App. Question 9. On the other hand, the PDA does not require that employers treat pregnant employees better than other temporarily disabled employees. Troupe v. May Dep’t Stores Co., 20 F.3d 734, 738 (7th Cir.1994); Maganuco v. Leyden Community High Sch. Dist. 212, 939 F.2d 440, 444 (7th Cir.1991); H. Rep. No. 95-948 at 4-5 (1978), reprinted, 1978 U.S.C.C.A.N. 4749, 4752-53 (basic principles of the PDA); see also California Fed. Sav. and Loan Ass’n v. Guerra, 479 U.S. 272, 289 & n. 29, 107 S.Ct. 683, 694 & n. 29, 93 L.Ed.2d 613 (1987) (holding that the PDA neither requires nor prohibits states from mandating maternity leave and reinstatement policies).

Rhett argues that Carnegie terminated her employment solely because of her absence and her absence was due solely to her pregnancy and related medical conditions. Consequently, in her view Carnegie terminated her employment because of her pregnancy. The Supreme Court has held that under the Age Discrimination in Employment Act an employer must ignore an employee’s age in certain employment decisions, but not any other characteristics such as pension expense. Hazen Paper Co. v. Biggins, 507 U.S. 604, 612, 113 S.Ct. 1701, 1707, 123 L.Ed.2d 338 (1993). The Court of Appeals for the Seventh Circuit has held, by analogy to Hazen, that the PDA “requires the employer to ignore an employee’s pregnancy, but ... not her absence from work, unless the employer overlooks the comparable absences of non-pregnant employees.... ” Troupe, 20 F.3d at 738. This holding is entirely consistent with the plain language of the PDA and the regulations we discuss above. This view eliminates Rhett’s theory of transitivity, that if A (termination) is caused by B (absence) which is caused by C (pregnancy), then C causes A. Other courts similarly have held that “the PDA does not force employers to pretend that absent employees are present whenever their absences are caused by pregnancy.” Crnokrak v. Evangelical Health Sys. Corp., 819 F.Supp. 737, 743 (N.D.Ill.1993).

We recognize that Smith v. F.W. Morse & Co., 76 F.3d 413 (1st Cir.1996), includes language contrary to that of Troupe for in Smith the court said that “an employer must put an employee’s pregnancy (including her departure on maternity leave) to one side in making its employment decisions.” Id. at 424 (emphasis added). In Smith, the pregnant employee was assured before she went on maternity leave that her position was secure, but the employer then eliminated her position during a reorganization while she was away. Id. at 418-19. The court’s holding, however, was that the elimination of the position was not an act of pregnancy discrimination merely because the employer discovered that the position was superfluous while the employee was on maternity leave; thus there was no causal nexus between her termination and her pregnancy. Id. at 424-25.

Notwithstanding the passage in Smith which we have quoted, Carnegie argues that Smith applies here because in its view Smith demonstrates that its action in terminating Rhett’s employment was justified as it, like the employer in Smith, had a legitimate non-pregnancy based reason to discharge the pregnant employee. Smith may be distinguished, however, because Carnegie eliminated Rhett’s position, rather than that of one of the other secretaries, because she was away on maternity leave. While it was apparent that one of the secretary positions was not needed, it was only Rhett’s absence which led to her termination. Carnegie has made no showing that Rhett’s position would have been eliminated if she had not been away at the time. Indeed, Carnegie made no comparative evaluation of the secretaries’ performance. In Smith, the particular position of the pregnant employee was shown to be superfluous while she was away. Smith, unlike this case, did not involve a choice by the employer as to which of several similar positions to eliminate.

This case is unusual in that Carnegie terminated an employee who had performed satisfactorily solely because of an economically justified reduction in force while she was away on maternity leave. See Geier v. Medtronic, Inc., 99 F.3d 238, 243 (7th Cir.1996) (fired pregnant employee not qualified because she could not meet required performance quotas); Troupe, 20 F.3d at 735 (pregnant employee fired for chronic tardiness prior to maternity leave); Soreo-Yasher v. First Office Management, 926 F.Supp. 646, 649 (N.D.Ohio 1996) (employee replaced while on maternity leave because of business need and company had written policy of not guaranteeing reinstatement after any leave of absence); Morrissey v. Symbol Techs., Inc., 910 F.Supp. 117, 121 (E.D.N.Y.1996) (fired employee’s maternity leave extended beyond time for which employer’s policy guaranteed reinstatement); Rudolph v. Hechinger Co., 884 F.Supp. 184, 186, 188 (D.Md.1995) (employee terminated while on maternity leave because of reasons independent of her absence); Ulloa v. American Express Travel Related Servs. Co., 822 F.Supp. 1566, 1570-71 (S.D.Fla.1993) (employee terminated in reduction in force while on maternity leave because her leave extended beyond time for which reinstatement guaranteed); Crnokrak, 819 F.Supp. at 743 (employer justification for demoting employee while on maternity leave could be pretext); Felts v. Radio Distrib. Co., 637 F.Supp. 229, 233 (N.D.Ind.1985) (employer justification of termination because of financial difficulties was a pretext). Furthermore, in this case Carnegie had need after Rhett was gone for an employee to do the type of work she did before it eliminated her position.

Nevertheless, the law covering this ease is clear for the view of the Court of Appeals of the Seventh Circuit which it set forth in Troupe, that an employer legitimately can consider an employee’s absence on maternity leave in making an adverse employment decision, is consistent with and, indeed, is compelled by the plain language of the PDA. Thus, Troupe properly requires the plaintiff employee seeking to recover under the PDA to show that the employer treated her differently than non-pregnant employees on disability leave. See 29 C.F.R. § 1604.10. While we do not ignore the contrary suggestion in Smith, we do not find it controlling because it is inconsistent with the language of the PDA. Thus, we cannot find, as Rhett urges, that the mere consideration of an employee’s absence on maternity leave is a per se violation of the PDA. In short, the PDA does not require an employer to reinstate an employee merely because she has been absent on maternity leave. Rather, the PDA is a shield against discrimination, not a sword in the hands of a pregnant employee.

Rhett has not made a showing that Carnegie treated her differently than it would have treated a non-pregnant employee absent on disability leave. Of course, it was difficult for her to make such a showing because Carnegie never has had an employee on disability leave for a protracted period for a reason other than pregnancy. Thus, we must affirm the district court’s denial of her PDA claim for the reasons indicated. See Ulloa v. American Express Travel Related Servs. Co., 822 F.Supp. at 1571 (Employer is entitled to judgment when employee “has failed to show by a preponderance of the evidence that she received disparate treatment when compared to non-pregnant employees.”).

The PDA does not require an employer to grant maternity leave or to reinstate an employee after a maternity leave. The PDA merely requires that an employer treat a pregnant woman in the same fashion as any other temporarily disabled employee. In this regard, we point out that it is not unlawful under the Americans with Disabilities Act for an employer when reducing its force to discharge an employee away from work by reason of a temporary disability. See Sanders v. Arneson Prods., Inc., 91 F.3d 1351, 1354 (9th Cir.1996); Rogers v. International Marine Terminals, Inc., 87 F.3d 755, 759 (5th Cir.1996). We acknowledge that arguably it was unfair for Carnegie to fire Rhett because she was on leave rather than to decide which secretary’s position to abolish on the basis of seniority or merit, but it was not illegal for it to do so unless it would not have eliminated the position of another employee on disability leave who was not pregnant. The PDA does not require fairness. See Ulloa v. American Express Travel Related Servs. Co., 822 F.Supp. at 1571.

Judge McKee in his dissent seems to believe that we are equating “pregnancy with a temporary disability under the ADA.” Dissent at 303. Of course, we are doing no such thing. Rather, we are holding that it is not unlawful under the PDA to terminate an employee absent by reason of pregnancy if the employer would have terminated an employee absent by reason of a different temporary disability. Thus, notwithstanding the intricate reasoning of the dissent, this case at bottom is quite straightforward and uncomplicated.

In view of our analysis, we conclude that although the bankruptcy and district courts erred in finding that Rhett did not make out a prima facie case of pregnancy discrimination (because they did not apply the Armbruster reduction in force analytical framework), the error was harmless. Carnegie asserted a legitimate nondiscriminatory reason for Rhett’s termination, that she was away on leave. Rhett has not satisfied her burden of showing that this reason was pretextual. Therefore, we will affirm insofar as this case involves the termination of Rhett’s position. Of course, our analysis requires that we affirm the district court in its rejection of her race and gender claims as well, based on the elimination of her position.⁴

In reaching our result, we have not overlooked Rhett’s argument that this case is somehow different than a case based on a claim of discrimination predicated either on race or gender, because she bases her claim on both race and gender. This argument adds nothing to her case because regardless of the basis for her claim of discrimination, she cannot establish that the legitimate reason that Carnegie proffered for terminating her was pretextual. Furthermore, we have not ignored Rhett’s argument that. Carnegie’s termination of her position had a discriminatory impact on her based on her race. Rather, we reject this contention as entirely insubstantial for an employee is not insulated from having her position lawfully terminated merely because she happens to be a minority.

Rhett also argues that Carnegie should have considered her for alternate positions. She says that the positions of property management administrative assistant, secretary to Landis and receptionist became open while she was on maternity leave and she was qualified for all of them. It is not disputed that she was not considered for any of these positions. But the bankruptcy court found as a fact, and the district court affirmed, that Rhett was not qualified for the property management position or the position of assistant or secretary to Landis. The bankruptcy court also found that Rhett never indicated that she would take a lower paying or temporary job. Rhett argues that these factual findings are clearly erroneous.

Rhett has offered no more than her own opinion that she was qualified for the property manager position. Gormisky testified that the position required more than basic secretarial skills and he did not believe that Rhett adequately could perform in the job. Turndorf also testified that he would not have hired her for that position because he did not feel she would perform well. This is more than enough support for the bankruptcy court’s finding that Rhett was not qualified. Similarly, Rhett asserts that she was qualified to be Landis’s personal secretary because of her extensive secretarial experience. The bankruptcy court’s finding that Rhett was not qualified for this job is supported by Turndorfs testimony that the job required a special attitude and ability to anticipate Landis’s needs which Rhett did not have. Inasmuch as the bankruptcy court was not clearly erroneous in finding Rhett not qualified for these positions, she has not made out a prima facie case of discrimination because of Carnegie’s failure to hire or interview her.

On the other hand, it is clear that Rhett was qualified for the position of receptionist. But the bankruptcy court held that she never expressed an interest in this job, which paid less than her prior position. Since this is a failure to hire situation, rather than a discharge situation, under McDonnell Douglas Rhett must show that she applied for the position. It is undisputed that Rhett did not apply for this position, or even express any interest in it.

Rhett argues that Carnegie had an affirmative duty to contact her (but cites no case for this proposition), and she would have expressed an interest if she had been contacted. The receptionist position was the lowest paying job in the office. It was not unreasonable for Carnegie to assume that Rhett would not accept this position, especially when she did not express any interest in it. On this point we observe that the bankruptcy court found that Rhett obtained a position with the Robert Wood Johnson Foundation and started work there on January 29, 1992, and earned $22,500 in 1992. Thus, it is understandable why Rhett did not seek a position as a receptionist as she was capable of obtaining more financially rewarding employment. Further, Turndorf testified that it was customary for employees returning from maternity leave to contact Carnegie, rather than Carnegie contacting them when a position opened up. Given this custom, we cannot find any error in the lower courts’ conclusion that Rhett failed to state a ■prima facie ease of discrimination because she was not given any of these positions.

C. CONCLUSION

We hold, in agreement with the Court of Appeals for the Seventh Circuit, the plain language of the PDA, and the regulations under the PDA, that an employee alleging a PDA violation must show that her employer treated her differently than it would have treated an employee on leave for a temporary disability other than pregnancy. It is not a violation of the PDA for an employer to consider an employee’s absence on maternity leave in making an adverse employment decision if it also would have considered the absence of an employee on a different type of disability leave in the same way. Inasmuch as Carnegie asserted that Rhett’s absence from work, rather than her pregnancy, was the reason for her termination, and Rhett has failed to show that this assertion was pretextual, her claim fails.⁵

In view of our conclusions, we will affirm the judgment of the district court entered August 6,1996.

1 . March 26, 1991, is the date Carnegie listed with the EEOC as Rhett's "Date of Termination." In addition, Rhett’s medical coverage continued with Carnegie until this date, as two weeks later she received COBRA information. The bankruptcy and district courts, however, found that Carnegie did not consider Rhett an employee at the time it abolished her position.

2 . She also made a claim under 42 U.S.C. § 1981 but she has not advanced that claim in these proceedings so we do not discuss it.

3 . Rhett argues that this case involves a per se violation of the PDA, so that she has presented direct evidence of discrimination. Accordingly, in her view we should analyze the case under Trans World Airlines, Inc. v. Thurston, 469 U.S. Ill, 105 S.Ct. 613, 83 L.Ed.2d 523 (1985), rather than under McDonnell Douglas. We reject this argument because, as we discuss below, consideration of an employee's absence on maternity leave is not a per se violation of the PDA. Furthermore, the bankruptcy and district courts did consider Rhett's claim of direct evidence of discrimination and properly rejected it. Thus, this is a McDonnell Douglas case.

4 . We are aware that Rhett alleged certain comments by her superiors which could lead to an inference of discrimination against her, but in holding that there is no evidence of racial or gender discrimination, the bankruptcy court implicitly found that Rhett's testimony that Tumdorf and Gormisky were abusive toward her regarding her status as an unwed mother was not credible, or that the explanation and denials by Turndorf and Gormisky were more credible. We cannot hold this factual finding clearly erroneous. Thus, there was no error in not inferring discrimination on the basis of these remarks. In any event, Carnegie articulated a legitimate nondiscriminatory reason for terminating Rhett and the bankruptcy court, in an unassailable finding, accepted that reason.

5 . We note, however, that there are federal and state laws which do require parental leave and reinstatement. See 29 U.S.C. §§ 2612, 2614; NJ. Stat. Ann. § 34:1 IB-4, -7 (West Supp.1997). These laws are not applicable in this case because Carnegie has fewer that 50 employees. 29 U.S.C. § 2611(4)(A); NJ. Stat. Ann. § 34J1B-3f.