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January 4, 1990

DAWN VEATCH, Plaintiff

James B. Moran, United States District Judge.

The opinion of the court was delivered by: MORAN

JAMES B. MORAN, United States District Judge

 Plaintiff Dawn Veatch (Veatch) filed this action against defendant Northwestern Memorial Hospital (the hospital) alleging that on November 8, 1987, after sixteen years of employment by defendant, she was summarily fired by her supervisor, Katherine Vestal. In counts I and II of her first amended complaint Veatch alleges that her firing violated Title VII of the Civil Rights Act of 1964 and the Age Discrimination in Employment Act (ADEA). *fn1" The remaining counts are pendent claims based on state law. Count III seeks damages for breach of contract, and count V for defamation. *fn2" The defendant moves for summary judgment on all counts. For the following reasons, that motion is denied in part and granted in part.


 After her initial employment in 1972 as a staff nurse in the hospital's department of psychiatry, plaintiff rose rapidly in rank. She became a supervisor in a year, moved up to assistant director in 1976, and became director of psychiatric nursing in 1977. Plaintiff remained in that position until her summary discharge a decade later. At the time of her discharge plaintiff was earning $ 59,155 a year, the top salary in the hospital's range for her position. *fn3"

 As director of psychiatric nursing plaintiff managed the support staff in six departments or "cost centers" within the Institute of Psychiatry. This included Department 453, the Adolescent Psychiatry Unit. Plaintiff was also responsible for planning, which included calculating budgets and hiring and training employees.

 Plaintiff's immediate supervisor was the hospital's vice-president of nursing. On July 15, 1987, the hospital hired a new manager, Katherine Vestal, to fill that supervisory position. Vestal's supervisor was Kathleen Murray, senior vice-president. Plaintiff had been working under Vestal for less than five months when she was discharged. *fn4"

 Plaintiff also had a "dotted line" reporting relationship with Dr. Harold Visotsky, the Director of the Institute of Psychiatry. Plaintiff worked closely with Visotsky, served with him on the Institute's steering committee, and was the only woman on that leadership body.

 Plaintiff asserts that she was fired because she is a woman, because of her age, and without just cause. The hospital responds that plaintiff was fired for a legitimate non-discriminatory reason that also constitutes just cause. The hospital contends that plaintiff was insubordinate and violated a clear order of her immediate superior, Katherine Vestal. The alleged insubordination relates to plaintiff's hiring of mental health workers. Though the hospital contends that plaintiff was not authorized to hire these workers, plaintiff denies that she was insubordinate.

 To resolve the claims of age and sex discrimination, we must explore some of the facts regarding the hiring of these workers. These facts are relevant to plaintiff's contention that the official reason for her discharge, insubordination, is not the real reason she was fired. For counts I and II, therefore, we are interested in whether the supervisor who made the firing decision actually believed that Veatch was insubordinate.

 To resolve the contract claim, we must delve perhaps even more deeply into the facts surrounding the hiring of the mental health workers. Here, the issue is not whether Vestal believed Veatch was insubordinate. Instead, the issue is whether Veatch was actually insubordinate. Some facts that are relevant to the contract claim may be irrelevant to the age and sex discrimination claims because facts unknown to Vestal at the time of the firing decision do not advance our inquiry into her motivation.

 Plaintiff's evidence, referred to in her statement of facts submitted under Local Rule 12(m), shows that this dispute over the hiring of mental health workers occurred in the midst of already intense administrative pressure to reduce costs in the Institute of Psychiatry. Mr. Gary Mecklenburg became defendant's president and chief executive officer in July, 1985. He found a budget that was out of balance and spent considerable time trying to cut expenses. Mecklenburg was convinced that major efforts were necessary to reduce expenses in the Institute of Psychiatry, which had significant deficits. Throughout 1986 and 1987, administrators pushed to cut the Institute's expenses. There was considerable friction between the hospital administration and the Institute of Psychiatry, based on money, and the administrators believed the Institute staff was overpaid (plaintiff's 12(m) statement of facts, no. 16). During the year and a half before plaintiff was fired, there was increasing pressure within the hospital to cut costs. The Institute of Psychiatry was one principal target of this pressure.

 The hospital's fiscal year begins on September 1 and ends on August 31. Dr. Visotsky serves on both the hospital's board of trustees and the budget committee. He was excluded, however, from the administrative process that determined the budget for the fiscal year that began in September, 1987. The number of "patient days" assigned to hospital departments underlies the calculations that determine each department's budget for staffing, salaries, and other expenses. In preparing the budget for the fiscal year that began in September, 1987, the hospital reduced the Institute of Psychiatry's patient days by 1,000.

 The hospital describes the number of staff in each department or cost center in terms of full-time equivalents, known as FTEs. Each FTE represents a full-time worker, though a budgeted FTE can be filled with several part-time workers. For the fiscal years that began in September 1987 and 1988, the budget provided for 48 FTEs for the Adolescent Psychiatry Unit.

 The hospital asserts that a manager of plaintiff's rank can add additional FTEs, beyond the number included in the budget, only with the prior approval of her supervisor, who would be Vestal in this case (defendant's 12(l) statement, no. 5). In response, plaintiff denies that such a clear rule existed. Further, she points out that there is a crucial difference between adding to the number of FTEs and hiring replacement workers, which is what plaintiff contends she was doing. Hiring replacement workers, plaintiff contends, can temporarily raise the FTE count for a given reporting period, even without hiring for unbudgeted positions.

 On October 13, 1987, plaintiff met with Vestal, presented graphs and figures, and proposed adding additional FTEs to the Adolescent Unit's budget. *fn5" Plaintiff explained the high rate of burn-out in the Adolescent Unit, the consequent high rate of turnover, the need to orient new workers, the problems in obtaining replacements, and safety problems caused by inadequate staff. Vestal responded by asking plaintiff to first verify her calculations with the fiscal department and then prepare a written proposal. Although Vestal did not approve the proposal at this October 13 meeting, plaintiff says that Vestal expressed an attitude of support. Vestal said she understood the problems in the Adolescent Unit and did not disagree with plaintiff's assumptions and figures. The fiscal department verified plaintiff's calculations, and sometime after October 30, 1987, plaintiff submitted a written proposal to add 12.5 FTEs to the Adolescent Unit's budget.

 The next discussion of the proposal occurred during a regular meeting between plaintiff and Vestal on November 20, when Vestal told plaintiff that she would have time over Thanksgiving to review it. At this meeting Vestal asked plaintiff about the amount of money being paid for staff, because the Institute of Psychiatry exceeded its October budget. Plaintiff explained a variety of factors that contributed to that situation, including the fact that some newly-hired staff were undergoing orientation and could not yet be assigned to patients. Vestal asked how orientation could be occurring since the proposal for additional positions had not been approved. Plaintiff replied that she had hired new staff for the Adolescent Unit to "address the attrition problem" while she waited ...

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