Legal Briefing: Poor Business Judgment Not Proof of Age Bias

For six years, Frank Woodward was a director of sales at Emulex Corp., a Costa Mesa, California-based technology company specializing in sales of computer components.

Woodward, who worked remotely in Massachusetts, had an excellent performance record, but because of a series of Emulex decisions, Woodward’s sales significantly declined by 2009. In response, Emulex eliminated the jobs held by Woodward and his two assistants and terminated Woodward.

Woodward sued Emulex for age-based employment discrimination under Massachusetts law, citing comments of Emulex managers that Woodward needed to “re-energize” and the irrational basis for his termination decision to show pretext.

The U.S. District Court for the District of Massachusetts granted summary judgment for Emulex and dismissed the lawsuit.

On appeal to the 1st Circuit Court of Appeals, that court agreed that the alleged comments showed no basis to demonstrate that age played a factor in the termination decision. Woodward’s claim that Emulex’s business judgment was so bad that its firing of Woodward must have been “pretextual” for discrimination, was also unpersuasive.

The 1st Circuit said it is “not concerned” with “unwise or unreasonable” business decisions, but only whether the stated reason for the decision is dishonest.  Also, Woodward was unable to demonstrate that younger, similarly situated employees with low sales had been retained by Emulex. Woodward v. Emulex Corp. (1st Cir.) No. 12-1612 (April 18, 2013).

IMPACT: An employer’s business judgment to justify terminations and other job actions is rarely sufficient to infer discriminatory motives without also showing statute-violating discriminatory conduct. Employers are advised to ensure that reductions in force are defensible by showing that similarly situated employees are equally affected.   

James E. Hall, Mark T. Kobata and Marty Denis are partners in the law firm Barlow, Kobata and Denis, which has offices in Los Angeles and Chicago. Comment below or email editors@workforce.com. Follow Workforce on Twitter at @workforcenews.