Plaintiff's case rests upon its contention that pursuant to a plan or pattern, a large number of defendant's employees were discriminated against by the defendant company by reason of each being 40 years of age or older. Defendant, on the other hand, denies any such plan or pattern and indeed that any employee has been discriminated against, by reason of age or any other reason, in either being terminated from his or her respective position or not being offered another position....
The sad saga seems to have begun in February 1971 when the Company appointed J. C. Gfeller, then 35 years of age, as its director of sales. Shortly thereafter, he also became vice president in charge of the Sales Department. At the time, the Company's sales had declined from a high 68.9 billion in 1952 to 33.5 billion in 1970. Cigarette sales continued to decline, as did the Company's percentage share of the market. The sales quota for 1971 was established at 39 billion cigarettes, but it was reduced to 35 billion in September, and 32 billion was the actual amount sold in 1971. The Hiring of New Top Management The Company hired Ken McAllister as president of the cigarette and tobacco division, and Jack Southard as vice president of marketing.
Both had consumer package goods backgrounds. In February 1971 the Company hired John Gfeller as vice president of sales. His business background was consumer package goods. Gfeller's charge was to help turn around the decline in the Company's cigarette sales. He was expected to show a dramatic improvement in sales within 18 months. As senior sales officer it was Gfeller's responsibility to achieve and maintain the distribution of the product line-to make sure the right amount of the product line was in the right place at the right time, properly priced and displayed. The sales responsibility ended at the retail shelf. Inducing the consumer to take the product off the shelf once the sales department got it there was the responsibility of marketing....
Manpower Planning and Analysis-Age and Minority Reports In late February 1971, Gfeller requested an analysis of field sales personnel showing ages and minority representation. He requested for each management level an age breakout in five-year groups and the average age for each level. For minority groups he asked for a breakout showing the numbers of each level and the percentage they represented. In April 1971, Gfeller hired Tom McMorrow as Director of Sales Planning. His job was to maximize promotion effectiveness and coordinate all promotion activities.
Also he reviewed all communications between field and headquarters and put a new Headquarters Communication Program into effect. Gfeller requested and received two updates of the age report-one dated July 31, 1971, and another dated September 30, 1971. This information showed the average age of sales representatives to be 33 and that of first-line managers to be 42.... McMorrow was appointed National Field Sales Manager on June 21, 1971, and was instructed by Gfeller to find out what the problems were in the field that were causing the continuing sales decline. McMorrow went into the field and worked with all levels of the sales force and called on customers...
Based on his visits and investigation, McMorrow concluded that field sales had an inferior management team compared to those of companies he had formerly worked for. Personnel Changes-Sales Department Thus, the Company set out on an intensive program of personnel changes. Gfeller and McMorrow instructed top management personnel to move against certain older managers working under their supervision. If the top manager delayed or sought to justify keeping the older manager, he was informed that he was "not getting the message." The key phrase used was that certain individuals were "not able to adapt" to the new procedures to be used by the Company. Throughout this period, Gfeller and McMorrow emphasized that they wanted young and aggressive people, that older individuals were not able to conform or adapt to the new procedures.
In specific reference to R. E. Moran, the defendant's top division manager for the year 1971, they made statements such as "he is over the hill" and "he is too old to learn." They also had a frequent saying when it was suggested that an employee had numerous years of experience: that it was not twenty years' experience, but rather one year's experience twenty times. Gfeller also commented in specific reference to L. D'Erasmo, who was 27 years of age in 1971, and who replaced R. E. Moran as area sales manager on September 1, 1972, that he was just the type of young man needed. The terminations under Gfeller's plan to reorganize the sales force began with the region managers.
They were all replaced with younger people. The first one terminated was W. F. Barrow, then 41 years of age, who had been employed in September 1954 and had been promoted to Central Region Manager in July 1970. He was terminated on September 10, 1971, when Gfeller and McMorrow told him he was no longer needed. The only reason they gave him was that he had a "human relations problem." He had no notice from defendant of any deficiency in his duties prior to his termination date.
In fact, less than two months earlier Gfeller had notified him by letter dated July 15, 1971, in pertinent part, as follows: My heartiest congratulations on your outstanding performance during the month of June in achieving and exceeding your assigned quota. This month was particularly important to all of us in that it was the first month of our recently assigned new specific sales objectives, the first month of your new incentive compensation program and the first month, as I view it, that you were given specific directions, specific tools and you dramatically demonstrated your individual and personal ability to rise to the occasion. Barrow, so the Court finds, had a history of outstanding performance.... C. Schmidt was the second region manager to be terminated.
He was then 46 years of age, had been employed for 21 years, and had in 1969 been promoted to Western Region Manager. Without prior notice, McMorrow came to his office on October 28, 1971, and read a letter to him from Gfeller stating that for the best interest of the Company he should be terminated. McMorrow told him that he (McMorrow) felt nervous about having Schmidt as his representative. The Court finds that McMorrow told Schmidt he felt him inadequate. Schmidt did not receive a copy of the Gfeller letter.
At that time his region ranked first for the year to date of the four regions, having met 97.56% of the assigned quota. The only document in his personnel file relating to his dismissal is a termination form indicating his resignation was requested for inability to perform duties. The Court finds that shortly after Schmidt's discharge, McMorrow stated he "needed younger men," and further that Schmidt "was not competent." Age obviously was a factor. Effective November 1, 1971, Hal Grant was appointed Western Region Manager. Shortly thereafter, Grant began terminations in California.
On February 7, 1972, Grant went to the office of E. W. Gardiner (age 46), the San Francisco Department Manager, and terminated him as of that date. Gardiner had no prior knowledge that he was to be terminated. Grant told him he was too old for the job and indicated that Gardiner did not fit the new youthful image the Company wanted to project.
At the time, Gardiner's department had a 9% share of the market, which was substantially higher than the defendant's share of the national market. Grant never notified him of any charged deficiencies in his performance. Gardiner (age 46) was replaced by T. Jennings (age 32). Thereafter, on August 7, 1972, the date he received his final salary check, Gardiner wrote a letter to the president of Liggett & Meyers in which, among other things, he specified how Grant had informed him "I was too old for the job." He received no response to the letter.... T. Jennings immediately began to complete the reorganization of the San Francisco Department.
He terminated R. J. Asche (age 41) on March 7, 1972. Asche had been an employee for 17 years. There was no BDR [an evaluation of the employee, called a business development review, or BDR] or evaluation prepared on Asche. The records in his personnel file reflect that he was a highly qualified employee. Jennings told him that he was to be replaced by a younger person. Jennings stated to him that many were to be replaced by younger, more qualified persons. Asche heard Jennings place an order with an employment agency for individuals under 35. Asche offered to take any other job, including sales representative, but Jennings told him that he would not fit in, he would not be happy, and they had no room for him.... [Here the court sets forth the details of numerous terminations in the sales department.]
A similar pattern occurred in the terminations of older sales representatives. J. T. Owens (age 42) and V. H. Hall (age 42) were terminated as sales representatives in the Nashville division on September 15, 1972, by H. M. Clunan (age 26), who was hired as a supervisor in Nashville on July 3, 1972. Clunan and D. O. Johnson (age 25), who was hired as the assistant department manager for the Memphis district on May 29, 1972, had visited Nashville after Clunan's appointment. At the first meeting in Nashville, Johnson commented to Clunan in the presence of Owens that some of the gentlemen were too old to be in the business.
Later, Johnson asked Owens what a man his age was doing in this business. At this time, the Nashville division had five sales representatives: M. D. Garner (age 37), E. V. Holt (age 34), H. Vance Owens (age 33), and Hall. Clunan kept the youngest, H. Vance, and terminated the remaining four. Clunan replaced them with K. Ingram (age 23), hired September 1, 1972, B. Marshall (age 25), hired September 1, 1972, R. Puettman (age 23), employed September 1, 1972 (transferred from Alabama), and S. Roberts (age 23), hired October 9, 1972. Clunan also hired L. Winn (age 26) on September 18, 1972. Clunan gave Owens no reason for termination. On the termination report, Clunan gave the reason that he felt Owens "could not adapt to new configuration."
On the payroll notification form, the reason given was that Owens was "not adapted to our type of work."... [The facts set forth above demonstrate that the company was in violation of the Age Discrimination in Employment Act. The court held that the company's disavowal of any discriminatory attitude on age was overcome by overwhelming evidence. It finds that although factors other than age may have been considered, in each instance, age was one of the determining factors and that this is impermissible under the law. The court determined that the violations of the company were willful, thereby triggering liquidated damages in addition to the lost wages and benefits.] So ordered.
Case Questions
1. What options did the employer have at its disposal to improve the performance of the sales department other than the massive terminations of its older employees?
2. Speculate as to why Gfeller and McMorrow favored younger employees over older employees.
3. If a person, wrongfully forced to take early retirement, signs a release not to sue the company for violation of the ADEA, is that release a defense in a subsequent ADEA lawsuit?