231 F.3d 414 (7th Cir. 2000)
In 1992 Ameritech Services, Inc. and Indiana Bell Telephone Company, subsidiaries of Ameritech Corporation created after the 1984 AT&T breakup, concluded they had a surplus of managers and designed a workforce reduction program targeting a 15 percent cut at ASI's 6,695 managers and a 10 percent cut at Indiana Bell's roughly 1,250 managers.1 The companies offered enhanced pension benefits calculated as if employees had remained until December 31, 1994, plus 2 percent of pay per year of service, and opened a six-month voluntary retirement window from August or September 1992 through March 1993.2
Employees who declined to sign waivers received a reduced package.3
The involuntary component, called CRESP, proceeded in three stages. In Stage 1 employees were grouped by skill and salary grade and the lowest 30 to 35 percent were placed on an at-risk list using 1990-1991 merit data and performance ratings.4 In Stage 2 managers re-ranked the at-risk employees, adding a new factor labeled growth potential that included advancement potential and the ability to grow and change with the business.5 In Stage 3 officers drew termination lines on the final ranked lists, resulting in 1,320 ASI managers and 223 Indiana Bell managers leaving, with 67.73 percent and 91 percent respectively over age 40.6
Their expert Wertheimer produced reports showing termination rates for employees age 40 and older exceeded those for younger employees by more than two standard deviations at multiple levels of aggregation, including vice-presidential and salary-grade groupings.7 He also calculated a net pension-plan gain of over $19 million from the ASI terminations.8 Plaintiffs additionally offered comments by managers. Indiana Bell president Thomas Reiman stated that the business would die without an influx of new young crazy people. ASI coordinator Jim Goetz remarked that the company wanted to hire people under 45 years old.9
Nineteen plaintiffs in Adams and thirty-five in Allard, all former management employees over age 40, filed suit on March 30, 1993, later amended on October 4, 1993, alleging a pattern or practice of age discrimination under the ADEA.10 The district court granted summary judgment to the defendants on the ADEA claims, the ERISA claims under sections 502, 503 and 510, and the constructive demotion claims, after excluding Wertheimer's reports and finding the remaining evidence insufficient.11 It also ruled that the standard waivers failed to comply with the OWBPA because they listed only salary grades rather than job titles.12
The court upheld additional post-termination settlement waivers signed by two Allard plaintiffs who had retained counsel.13 The cases were consolidated and the district court certified its orders as final under Rule 54(b) for immediate appeal to the Seventh Circuit.14
Whether the district court abused its discretion by excluding the plaintiffs' statistical expert reports under Daubert standards?15
Under Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993), the district court must ensure expert testimony is both reliable and relevant, with reliability assessed through factors including whether the theory can be tested, has been peer reviewed, has a known error rate, and enjoys acceptance in the scientific community, and relevance determined by whether the testimony assists the trier of fact; such rulings receive abuse-of-discretion review under Kumho Tire Co. v. Carmichael, 526 U.S. 137 (1999).16
Yes. The Wertheimer reports demonstrated termination rates for employees age 40 and older that exceeded those for younger employees by more than two standard deviations at multiple levels of aggregation, including vice-presidential and salary-grade groupings, and the district court's concerns about variables and causation went to the weight rather than admissibility of the evidence, as the reports ruled out chance and other evidence could address intent, consistent with Bazemore v. Friday, 478 U.S. 385 (1986).17
The district court abused its discretion when it excluded the plaintiffs' statistical expert reports from consideration at summary judgment.18
Whether the plaintiffs presented sufficient evidence to survive summary judgment on their ADEA pattern-or-practice and individual disparate-treatment claims?19
A plaintiff alleging a pattern or practice of age discrimination under the ADEA must show by a preponderance of the evidence that age discrimination was the employer's standard operating procedure, as established in International Brotherhood of Teamsters v. United States, 431 U.S. 324 (1977), while individual disparate-treatment claims require proof that age actually motivated the employment decision under Reeves v. Sanderson Plumbing Products, Inc., 530 U.S. 133 (2000); statistical evidence combined with other evidence such as age-related comments can suffice to create a genuine issue of material fact.20
Yes. The Wertheimer reports showed termination rates for employees age 40 and older exceeded those for younger employees by more than two standard deviations at multiple levels of aggregation, including vice-presidential and salary-grade groupings.21 Plaintiffs offered comments by managers. Indiana Bell president Thomas Reiman stated that the business would die without an influx of new young crazy people.
ASI coordinator Jim Goetz remarked that the company wanted to hire people under 45 years old. These items, together with the pension-plan financial incentive, created a triable issue on whether age motivated the reductions in force.22
The plaintiffs presented sufficient evidence to survive summary judgment on their ADEA pattern-or-practice and individual disparate-treatment claims.23
Whether the district court properly dismissed the plaintiffs' ERISA claims for failure to exhaust administrative remedies under the pension plan?24
A plaintiff seeking benefits under ERISA sections 502 and 503 must exhaust the administrative review and appeal process set forth in the plan before bringing suit in federal court. A district court's decision to dismiss for failure to exhaust is reviewed for abuse of discretion.25
Yes. The plaintiffs failed to pursue the written administrative review and appeal process required by the Ameritech Management Pension Plan Summary Plan Description before filing their ERISA claims.26 The one Allard plaintiff who did exhaust failed to include the claim in pretrial contentions until after the deadline had passed.27
The district court properly dismissed the plaintiffs' ERISA claims for failure to exhaust administrative remedies under the pension plan.28
Whether the waivers signed by terminated employees satisfied the disclosure requirements of the Older Workers Benefit Protection Act?29
Under the Older Workers Benefit Protection Act, 29 U.S.C. § 626(f)(1)(H), a waiver requested in connection with an exit incentive or other employment termination program must inform the individual in writing of the job titles and ages of all individuals eligible or selected for the program, and the ages of all individuals in the same job classification or organizational unit who are not eligible or selected.30
No. The standard waivers signed by the plaintiffs referred only to salary grades rather than job titles of those selected for the CRESP program.31 The district court correctly determined that salary-grade information was too general to satisfy the statute's requirement of specific information allowing employees to ascertain whether they were treated fairly vis-a-vis their peers.32
The waivers signed by terminated employees did not satisfy the disclosure requirements of the Older Workers Benefit Protection Act.33
Whether the constructive demotion claims of the five Allard plaintiffs could proceed if the underlying RIF was discriminatory?34
An employee who accepts a demotion or early retirement in the face of a potentially discriminatory reduction in force may still pursue an ADEA claim if the decision was not truly voluntary, as explained in Henn v. National Geographic Society, 819 F.2d 824 (7th Cir. 1987), because the employee was driven to the choice by the threat of termination rather than by the attractions of the alternative position.35
Yes. The five Allard plaintiffs who accepted lower-paying craft positions did so while on the at-risk lists created by the CRESP process, knowing they faced termination if they remained in management, and therefore their decisions were not voluntary if the underlying reductions in force were infected with age discrimination.36
The constructive demotion claims of the five Allard plaintiffs could proceed if the underlying RIF was discriminatory.37