ADEA Claim Fails Where Discriminatory Comments Were Made By Individuals Who Had No Part In A Decision To Terminate Or Were Not Employed By Defendant And Plaintiff Produced No Evidence Of Pretext

Kenneth Sandstad began his career with C.B. Richard Ellis, a real estate services company, as sales manager of the Minneapolis office in 1974. Over the next 16 years he was promoted to Vice President and Resident Manager of the Minneapolis office, First Vice President and Resident Manager of the North Dallas office, and South Central Regional Manager of the Brokerage Business Unit.

The Brokerage Business Unit was organized in three divisions, and in 1990, Sandstad became Central Division Manager. He reported directly to then President of Brokerage Services Gary Beban until the end of 1994, when his Division was eliminated and he became Senior Executive Vice President of Institutional Services. This was also an upper management position, and Sandstad reported to Dick Clotfelter. In late 1995, Clotfelter gave Sandstad a poor performance review, questioning his management and noting his failure to focus on essential tasks. In 1996, Sandstad returned to the Brokerage Business Unit as Eastern Division Manager, again reporting to Beban.

Beginning in 1996, the Company designed and implemented a Long-Term Leadership Orientation Program to integrate younger employees into senior management. A 1997 memo issued by then CEO James Didion described the Plan as one to "identify 30 to 50 younger managers and management candidates to serve as a pool of talent for promotion to senior management over the next 5+ years, ultimately replacing senior management." Brett White, who eventually replaced Gary Beban as President of Brokerage Services and who terminated Sandstad, was a participant of this program.

Ellis became a publicly traded company in late 1996. The Company prepared question-and-answer literature for road shows held in anticipation of the public offering. The literature described the Company's plan to integrate younger employees into management. During the road shows, stock analysts remarked to Company representatives that there was "too much grey hair" in senior management. Among the representatives who heard these comments was Walter Stafford, senior manager and General Counsel for the Company. Stafford told other senior managers about the remarks and stated that something would have to be done to remedy the analysts' perception. Stafford was among the managers who later decided to fire Sandstad.

In 1997, Beban moved from President of Brokerage Services to President of Corporate Services. Sandstad was in line to fill the vacancy left by Beban; however, CEO James Didion instead selected Brett White, who was 37 years old at the time he was promoted. Beban told Sandstad that Didion had decided to "skip a generation" in selecting Beban's replacement.

In early 1998 the Brokerage Business Unit was reorganized from three divisions into nine regions. Sandstad was assigned the lead management role in the South Central Region. Soon thereafter, two managers who reported directly to Sandstad registered their frustration with Sandstad's management. In July 1998, White, in his role as President of Brokerage Services, gave Sandstad's management of the Dallas market a negative review. The next month, Nina Petty, a manager who reported directly to Sandstad, filed a formal written complaint of gender discrimination against Sandstad.

The Company hired Rogge Dunn as outside counsel to investigate Petty's complaint. Dunn interviewed Sandstad, Petty, and other employees in Sandstad's region, and compiled a report that included summaries of the interviews he conducted. Dunn reported that employees complained about Sandstad's conduct and management style generally. His own impression of Sandstad was that Sandstad was a "bully," was condescending, and was not credible during his interview. Dunn concluded that while he thought Sandstad had not discriminated against Petty, Sandstad's actions with regard to Petty were nonetheless inappropriate and placed the Company at substantial risk of a jury verdict.

Walter Stafford, after meeting with senior managers Ray Wirta and James Didion, recommended Sandstad's discharge to White. White conferred briefly with the Company's legal department and discharged Sandstad shortly thereafter. White told Sandstad that the reasons were poor performance and lost confidence in his leadership. At the time, Sandstad was age 52. The region under Sandstad's direction was combined with a region managed by Jeff Langdon, age 42.

White issued a memorandum announcing the discharge to the employees in Sandstad's region. The memorandum described the reason as lost confidence in Sandstad's ability to perform following the investigation prompted by a gender discrimination complaint lodged against Sandstad.

Sandstad sued under the Age Discrimination in Employment Act (ADEA). The district court granted the defendant summary judgment, and the 5th Circuit affirmed:

Appellee's proffered reasons for terminating Sandstad were his management style and the risk created by his conduct toward Nina Petty.

[G]iven Appellee's nondiscriminatory explanation, Sandstad must point to evidence creating an issue of fact as to the pretextual nature of the explanation.

Sandstad argues that . . . oral statements . . . provide evidence of discrimination sufficient to show pretext. Oral statements constitute evidence of discrimination if they indicate age-based animus and the speaker is principally responsible for the plaintiff's firing.

The statements offered by Sandstad fail in that the speakers were not responsible, primarily or otherwise, for his termination. The comment by Gary Beban that James Didion had "skipped a generation" in choosing Beban's replacement could indicate age-based animus, and we draw that inference in favor of Sandstad. However, Beban was not among the managers who made the decision to fire Sandstad.

The remarks by stock analysts that the Company had "too much grey hair" in management indicate age based animus. However, the link between the speakers, who were not even Company employees, and Sandstad's termination is absent.

Sandstad v. CB Richard Ellis, Inc.

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The 5th Circuit Court of Appeals' jurisdiction includes Louisiana, Texas and Mississippi.

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