Severe v. O'Reilly Automotive Stores, Inc.

Citations: 92 F. Supp. 3d 892; 2015 U.S. Dist. LEXIS 35488; 2015 WL 1297500Docket: No. C13-3055-LTS

Court: District Court, N.D. Iowa; March 23, 2015; Federal District Court

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Defendant O’Reilly Automotive Stores, Inc. has filed a motion for summary judgment regarding a lawsuit brought by plaintiff Steven Severe, who alleges unlawful discharge due to age discrimination and medical leave usage. Severe's claims include violations of the Iowa Civil Rights Act (ICRA), the Age Discrimination in Employment Act (ADEA), and the Family and Medical Leave Act (FMLA). O’Reilly disputes Severe's allegations and asserts various defenses. The case was originally filed in the Iowa District Court and removed to federal court, with a trial set for May 4, 2015. Severe, born March 25, 1952, was employed by O’Reilly from January 1999 until November 2012, serving as District Manager for District 22, which expanded from eight to thirteen stores under his management. His reporting structure included three Region Directors and a Division Vice President, Ken Martin, who has held his position since 2006, except for a one-year gap. The motion for summary judgment is fully submitted following oral arguments on February 20, 2015.

While serving as Division Vice President, Martin promoted every candidate he recommended for the position of Region Director, with Severe being on O'Reilly's 'high potential' list. Despite interviewing Severe for a Region Director role in 2008, Martin had already decided against promoting him, opting instead to recommend five younger District Managers for promotion, whose ages ranged from 29 to 42, compared to Severe's mid-50s. Severe alleges that age was a factor in Martin's decisions, a claim O’Reilly disputes, citing Severe's unwillingness to relocate, which Severe denies. 

In October 2012, following the resignations of the Storm Lake store manager and assistant manager, Severe notified Lewis of the situation. Lewis proposed that Severe manage the store on an interim basis, which Severe resisted, expressing frustration and suggesting he would resign if pressured to take the role. Following this conversation, Lewis documented the discussion and reported to Martin, who advised contacting the Region’s Human Resources Manager and arranging a conference call with Severe. Martin subsequently informed his supervisor about the incident.

On the evening of November 1, 2012, Lewis communicated with Stahl and forwarded an email sent to Severe earlier that day. Stahl suggested waiting for Severe to call the next morning. Severe took a sick day on November 1 and informed Lewis of a doctor’s visit. Lewis expressed hope for Severe's recovery and mentioned scheduling a conference call. Severe proposed November 2 for the call, during which he disclosed his doctor's recommendation for a two-week leave from work. Martin supported this leave, emphasizing the need for Severe’s recovery and confirming accommodations at the Storm Lake store.

Severe faxed his doctor's note to Lewis, who forwarded it to Human Resources, requesting a Leave of Absence (LOA) packet for Severe. On November 7, O’Reilly mailed Severe information about his rights under the Family and Medical Leave Act (FMLA) along with a leave application. Severe's FMLA leave was effective from October 31, 2012. An announcement was made to management about Severe's leave and Lewis's interim role as District Manager.

Following the conference call, Martin updated his supervisor and top O’Reilly executives regarding Severe's situation. Wise inquired about Severe's performance before the incident, expressing concern over his temperamental nature but acknowledging his dedication. Martin noted some performance issues yet advocated for Severe’s potential recovery. Wise suggested the company might be better off if Severe chose to resign, a view supported by Henslee. Martin later shared this email exchange with Lewis.

On November 16, Severe called Lewis to request an additional two weeks off, providing another doctor's note. Lewis continued to manage Severe's responsibilities during his leave. Additionally, Severe mentioned a specific pay arrangement (the "Trickle Pay Arrangement") for employee Delbert Trickle, claiming it had been approved by his former Region Director, Alexander, and communicated to his successor, Harris, but not to Lewis.

Severe asserts that the Trickle Pay Arrangement was not secret, as various store managers at the Ames location were aware of it during its eight-year duration. On November 19, 2012, Lewis learned about this arrangement during a conversation with the store manager, Jeremy Mobley, marking Lewis's first awareness of it. According to the O’Reilly Loss Prevention Policy, all confirmed or suspected fraud must be reported to the Loss Prevention Department. Upon discovering the arrangement, Lewis reported it to Martin, who advised contacting Loss Prevention. Lewis then spoke with Division Loss Prevention Manager Steve Dube, who escalated the issue to Vice President Barry Sabor for investigation. Dube interviewed employees Trickle, Mobley, and Rodney Thomas, all of whom confirmed the arrangement and Severe’s role in its establishment. Thomas indicated he was instructed by Severe to compensate Trickle for 72 hours per pay period to circumvent financial limitations, while Mobley noted that this arrangement was pre-existing and mandated by Severe. After reviewing the interviews, Sabor instructed Dube to interview Severe, who was on leave but agreed to an interview on November 29, 2012. Severe confirmed the arrangement was his decision to retain Trickle but refused to provide a written statement when requested, contrary to company policy. Following the interview, Dube reported to Sabor, who directed Severe’s termination. Dube notified Severe of his discharge on November 30, 2012, without disclosing the reason.

Any party can file a motion for summary judgment on any part of a case's claims under Fed. R. Civ. P. 56. Summary judgment is warranted when the combined evidence from pleadings, depositions, interrogatories, admissions, and affidavits demonstrates no genuine issue of material fact, allowing the moving party to obtain judgment as a matter of law (Celotex Corp. v. Catrett). A material fact is one that could influence the case's outcome based on applicable law (Anderson v. Liberty Lobby, Inc.). Facts critical under substantive law are deemed material, while those irrelevant or unnecessary are not. A genuine issue of material fact exists if it has a real basis in the record or if a reasonable jury could rule for the nonmoving party (Woods v. DaimlerChrysler Corp.). Evidence that merely creates metaphysical doubt or is not significantly probative does not establish a genuine issue (Matsushita Elec. Indus. Co. v. Zenith Radio Corp.; Anderson). The moving party must inform the court of the basis for its motion and identify portions of the record showing a lack of genuine issues (Hartnagel). Once this burden is met, the nonmoving party must present specific facts demonstrating a genuine issue for trial (Mosley v. City of Northwoods). If the nonmovant fails to show a genuine and material issue, the opposing party is entitled to judgment as a matter of law (Celotex). In assessing the presence of a genuine issue, evidence must be viewed favorably towards the nonmoving party, without weighing the evidence or assessing witness credibility (Kammueller v. Loomis, Fargo & Co.; Quick v. Donaldson Co. Inc.). No special summary judgment standards apply to employment discrimination cases.

In Torgerson v. City of Rochester, 643 F.3d 1031 (8th Cir. 2011), the court rejected a "discrimination case exception" for summary judgment motions, emphasizing the complexities involved in proving employment discrimination and retaliation. These cases have become increasingly challenging to prove since the enactment of key legislation like the Equal Pay Act, Title VII, the Age Discrimination in Employment Act, the Americans with Disabilities Act, and the Family and Medical Leave Act. Employers often do not admit to discriminatory intent and typically do not leave incriminating evidence. Historical precedents indicate that as overt discriminatory practices have been outlawed, employers have developed more sophisticated methods to engage in discrimination.

Adverse employment actions often involve considerable discretion, allowing employers to fabricate plausible reasons for actions such as hiring or firing. Typically, discrimination and retaliation claims arise from average or below-average employees, as those with higher performance levels are less likely to pursue such claims due to economic implications. Additionally, disgruntled former employees may falsely claim discrimination as a reason for their termination, complicating the factual determination in these cases. 

At the summary judgment stage, the critical inquiry remains whether evidence exists to create a genuine issue of fact regarding whether an employer intentionally discriminated against a plaintiff based on a protected characteristic. The document references Severe's claims under federal and Iowa law, asserting wrongful discharge due to age and retaliation for FMLA leave, which will be addressed separately.

The ADEA and ICRA prohibit age discrimination against employees. Claims are evaluated using the McDonnell Douglas burden-shifting framework, which requires the plaintiff first to establish a prima facie case of discrimination. If successful, this creates a presumption of discrimination, shifting the burden to the employer to provide a legitimate, non-discriminatory reason for its actions. If the employer meets this burden, the plaintiff must then demonstrate that the employer's reason is a pretext for discrimination. At the summary judgment stage, the plaintiff must present sufficient admissible evidence to create genuine doubt about the employer’s motives. Pretext can be established through various methods, including showing that a discriminatory reason was more likely, discrediting the employer’s explanation, or presenting comparator evidence of younger employees receiving more lenient treatment for similar infractions. A plaintiff must also demonstrate that circumstances allow a reasonable inference of discriminatory intent. Under the ADEA, age must be shown as a "but-for" cause of the adverse action, while the ICRA requires only that age "played a part" in the decision. In this case, the parties agree that Severe has established a prima facie case, and O’Reilly has provided a legitimate reason for termination. The central issue is whether Severe has raised a genuine question of fact regarding the legitimacy of O’Reilly’s reason for termination as a pretext for age discrimination.

Timing is pivotal in the determination of Severe's employment termination. O’Reilly asserts that Sabor independently decided to terminate Severe on the evening of November 29, 2012, after receiving a report from Dube about a loss prevention interview. O’Reilly denies any involvement or direction from Martin or other executives, claiming the decision was influenced solely by the Trickle Pay Arrangement. Any evidence suggesting the termination occurred before November 29 would challenge O’Reilly’s narrative. Sabor's testimony supports O’Reilly’s claim but admits that if the decision was made earlier, he was not the decision-maker. Severe, on the other hand, asserts that the termination decision was made on or before November 28, 2012, citing various pieces of evidence: the dates on his final paycheck, statements from an O’Reilly payroll employee, comments from Dube, alleged procedural noncompliance by O’Reilly, and statements from Sabor. Severe argues that an earlier decision could imply Martin’s involvement, suggesting age bias influenced the termination. The final paycheck, dated December 7, 2012, reflects payment only through November 28, while a special check for November 29 was issued on the day of the loss prevention interview. Severe posits this indicates his termination date was November 28, with the subsequent check serving to support O’Reilly's timeline. O’Reilly explains the payment structure due to Severe being on FMLA leave; his final paycheck was delayed until December 7, following company policy. The issuance of a special check for November 29 is attributed to Severe working that day, leading to a regular pay entitlement. Although O’Reilly's reasoning may be valid, the unusual circumstances allow for reasonable jurors to question the situation.

O’Reilly has not justified why the final paycheck issued on December 7, 2012, could not have included both sick pay through November 28, 2012, and regular pay for November 29, 2012. There is no indication that employees receive separate checks for sick and regular pay. The issuance of a separate check on November 30, 2012, could support Severe’s claim that his termination date was November 28, suggesting O’Reilly issued the separate check to imply the decision occurred later. This matter is for the jury to decide. 

Severe cites statements from Debbie, an O’Reilly payroll employee, who reportedly indicated that the termination date in O’Reilly’s system was November 28, 2012. O’Reilly argues this constitutes inadmissible hearsay, which cannot be used against a summary judgment motion unless admissible evidence is shown to be available at trial. However, the standard allows for evidence that could be rendered admissible at trial. Severe’s affidavit establishes a history of working with Debbie, who is positioned as an authoritative figure within the payroll department. Thus, her statements could potentially qualify as admissible under the "admission by party opponent" or "business records" exceptions.

While the sufficiency of this evidence remains uncertain for trial, at the summary judgment stage, it cannot be deemed inadmissible as a matter of law and bolsters Severe’s argument regarding the timing of his termination. Furthermore, statements made by Dube during a recorded interview indicate that Barry Sabor, allegedly the decision-maker, was not acting alone, as he intended to consult with others before making a decision. Viewed favorably for Severe, these statements challenge O’Reilly’s assertion that Sabor was the sole decision-maker, creating a genuine issue of material fact.

Severe refused to provide a written statement during a loss prevention interview regarding the Trickle Pay Arrangement, leading Dube to indicate that the usual procedure would be suspension without pay until a statement was given. Instead of being suspended, Severe was discharged. Sabor, who testified, noted that while a refusal can affect disciplinary decisions, it does not automatically result in termination. He added that if an employee admits to a violation warranting termination, the decision can proceed without a written statement. Severe argues that his discharge before providing a statement was inconsistent with O’Reilly's usual practices, suggesting that the termination decision may have been made prior to the interview and that the interview was a mere formality. Although this evidence alone is weak, when considered with other evidence, it might support the inference that the stated reason for his discharge was pretextual. 

Severe claims that O’Reilly would not have discharged him solely for the Trickle Pay Arrangement, arguing other factors, such as his age, were likely motivations. He points out that his initial supervisor was aware of and approved the arrangement in 2004, yet he was not discharged until 2012, indicating it may have been a pretext for age discrimination. Severe also noted that O’Reilly allows managers some discretion in bending rules for business decisions, which he argues legitimizes the Trickle Pay Arrangement as a reasonable business choice. He testified that he informed his then-supervisor, Alexander, about the need for a raise for an employee, leading to the arrangement, and that this was later discussed with Alexander's successor, Harris. However, both denied knowledge of the arrangement. For the purposes of O’Reilly's motion, Severe's testimony must be accepted as true, implying that the Trickle Pay Arrangement was established with approval from management.

Evidence indicates that the Tickle Pay Arrangement was not the primary reason for Severe's termination. Severe argues that this arrangement was similar to the Ubben Pay Arrangement, which did not result in any employee being discharged. Disputes exist regarding the specifics of Ubben's arrangement; Severe asserts that Ubben, an hourly employee, received a flat payment for fifty hours weekly without clocking in, while O’Reilly contends that Ubben's hours were accurately recorded by a manager. Notably, Ubben’s arrangement did not involve receiving pay for hours beyond actual work, contrasting the Tickle Pay Arrangement, which involved double payment for hours not worked. The jury is tasked with assessing the implications of these distinctions, as they may support Severe's claim that O’Reilly's stated reasons for termination were pretextual and possibly discriminatory.

Severe claims that Martin played a role in his termination and had a bias against older employees, evidenced by Martin's recommendation of five younger District Managers for promotion, averaging 18 years younger than Severe. O’Reilly denies any age bias in Martin’s decisions, but the evidence suggests that reasonable jurors could infer otherwise. Severe was on the "high potential" list, while one promoted individual, Jim Belschner, was significantly younger and less experienced. If Martin's involvement in Severe's termination is established, his history of promoting younger employees over more qualified older ones could indicate age discrimination. Severe supports his claims with emails between Martin and O’Reilly executives, which will be elaborated upon further in the context of his argument.

On October 31, 2012, Martin emailed Jeff Shaw, O’Reilly’s Senior VP of Sales and Operations, regarding Steve Severe's verbal notice of resignation after he declined to manage the Storm Lake store temporarily. Martin indicated he was coordinating with HR to handle the situation appropriately and informed Lewis and HR manager Jon Stahl of this communication. Later that evening, Lewis suggested contacting Severe again the next morning to possibly obtain a written resignation. Martin speculated that Severe was aware of their future plans. 

On November 2-3, further emails were exchanged after Severe requested FMLA leave, involving high-level executives including CEO Henslee and COO Wise, despite their typical non-involvement in such personnel matters. Martin briefed them on Severe's situation, highlighting Severe's reluctance to manage the Storm Lake store and his potential resignation. Wise inquired about Severe's job performance, to which Martin detailed alleged deficiencies, claiming a lack of respect for Severe and suggesting that Severe might no longer be capable of fulfilling his role. Severe contested Martin's claims, referencing a recent positive performance evaluation from Lewis and noting that Martin had not recommended any corrective measures. Wise and Henslee both expressed that the company might be better off if Severe left, with Henslee echoing Martin's sentiments. Martin subsequently forwarded this exchange to Lewis, indicating that senior leadership would prefer Severe's departure.

Reasonable jurors could find that Martin created a negative perception of Severe among O’Reilly’s executives by delivering a disproportionately critical performance review and subsequently informing Lewis of this sentiment, which could have influenced Lewis's actions. Additionally, the timing of Lewis initiating a loss prevention investigation, just three weeks after these communications, raises suspicion, particularly regarding an established pay arrangement. Although the jury may choose to believe O’Reilly's witnesses that the investigation and Severe’s termination were unrelated, they are not obligated to accept this testimony. Evidence suggests Martin may have harbored bias against older employees, potentially impacting O’Reilly's decision to terminate Severe, thus creating a factual dispute that necessitates resolution at trial.

Under the Family and Medical Leave Act (FMLA), employees are entitled to twelve weeks of leave for serious health conditions. An FMLA discrimination claim arises if an employer takes adverse action based on the employee’s exercise of FMLA rights. Employees seeking FMLA leave do not have additional protections against termination unrelated to their leave. In the absence of direct evidence, such claims follow the McDonnell Douglas framework, requiring the plaintiff to demonstrate they exercised FMLA rights, faced adverse action, and establish a causal link between the two. The plaintiff only needs to show that their FMLA rights "played a part" in the employer's decision, with circumstantial evidence, including timing, potentially indicating retaliatory motive. Severe contends that his FMLA leave motivated Martin’s actions leading to his termination.

Severe asserts he fulfills the initial elements of a prima facie case for FMLA discrimination by demonstrating that he took FMLA leave and was terminated within thirty days of that leave. He claims evidence exists to suggest a causal link between his FMLA leave and his termination, pointing to email communications from Martin to O’Reilly’s executives, which allegedly implied Severe's inability to perform due to medical leave. After Martin learned of Severe’s need for leave, he reportedly suggested to management that Severe was unfit to remain as District Manager. Additionally, post-disclosure of Severe’s medical limitations and Martin's negative performance assertions, O'Reilly executives concluded they would be “better off” without him. Severe was terminated less than a month after notifying O’Reilly of his leave. While there is room for reasonable jurors to side with O'Reilly's witnesses and attribute the decision solely to other factors, there is also enough evidence for a jury to infer that Martin influenced the termination, indicating Severe’s FMLA leave may have been a contributing factor. Consequently, O’Reilly's motion for summary judgment on the FMLA discrimination claim is denied, while the claim for interference with FMLA rights is dismissed as Severe concedes insufficient evidence supports it. The trial will proceed on May 4, 2015, for the remaining claims.