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© 2014 Zuckerman Spaeder LLP

Saving Cash Saves Employer From Age Discrimination Claim

An executive who brings a discrimination claim must jump through a number of hurdles to get to trial.  On this blog, we’ve posted on a number of occasions about how under the McDonnell-Douglas test, an executive must prove a prima facie case of discrimination, after which the employer has the opportunity to show that it acted for legitimate, non-discriminatory reasons.  If the employer meets this burden, and the executive cannot come forward with evidence to rebut these legitimate reasons, then the court will award summary judgment to the employer before the case even gets to a trial. 

The Eleventh Circuit’s recent decision in Ostrow v. GlobeCast Am. Inc., No. 11-16043 (11th Cir. Sep. 17, 2012), provides another example of how an employer can defeat a claim of discrimination by presenting non-discriminatory reasons for its actions.  

Andrew Ostrow was Globecast’s Vice President of Business and Legal Affairs and served as its general counsel.  In 2009, when Ostrow was 60 years old, GlobeCast hired a 37-year-old to serve below Ostrow – without asking Ostrow whether the hire was OK.  A few months later, GlobeCast’s new CEO told Ostrow that he wouldn’t renew his contract, and promoted the new hire to fill his job.  Aggrieved, Ostrow filed suit under the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. § 623(a)(1).

In its summary judgment motion, GlobeCast conceded that its actions constituted prima facie discrimination.  It argued, however, that it had legitimate, non-discriminatory reasons for its action, because its new CEO had testified that he wanted to cut costs in the legal department by cutting employees, and that he was disappointed in Ostrow’s performance  The district court held that Ostrow had shown enough to rebut the CEO's claims about his performance, but that he didn’t rebut the cost-cutting rationale.  Thus, he had failed to meet his burden, and GlobeCast prevailed.

On appeal, the Eleventh Circuit upheld the district court’s ruling.  Although Ostrow had attempted to show a pattern of terminating older employees and saving the jobs of the younger ones, the court said that he had not shown such a pattern.  Further, the record lacked any comments about how the CEO liked young go-getters, which might have been circumstantial evidence that the company was lying all along when it said it was just looking to cut costs.  For the Ostrow court, the fact that the plaintiff had shown that three out of the ten employees who were fired were over 50, and that two of those three had their job duties assumed by a significantly younger employee, wasn’t enough to create a “genuine issue of material fact.”  Left unanswered was the question of when the percentages become significant enough to create a "genuine" issue.

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