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NOCHOWITZ v. ERNST & YOUNG

June 20, 1994

STANLEY W. NOCHOWITZ, Plaintiff,
v.
ERNST & YOUNG, Defendant.



The opinion of the court was delivered by: MILTON I. SHADUR

 Stanley Nochowitz ("Nochowitz"), who was 48 years old when he was fired by Ernst & Young on December 31, 1991, *fn1" brought this action against his former employer alleging discrimination in violation of the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. ยงยง 621-634. Because Ernst & Young claims that Nochowitz' termination was purely a consequence of firm-wide downsizing *fn2" and had nothing to do with his age, it has moved for summary judgment under Fed. R. Civ. P. ("Rule") 56. For the reasons stated in this memorandum opinion and order, Ernst & Young's motion is granted and this action is dismissed.

 Background

 Ernst & Young is a partnership comprising public accountants. It was formed in October 1990 when Ernst & Whinney combined with Arthur Young & Company, the firm for which Nochowitz had worked since March 1988. From the time of the merger until he was fired, Nochowitz served as an Ernst & Young senior manager, a position that involved him in retail management consulting engagements on which he was expected to serve clients by sharing his acquired knowledge and experience in the retail industry.

 Although Nochowitz also worked on other assignments, about two-thirds of his 3-3/4 year tenure was spent on an assignment related to Walgreen Company. *fn3" By all accounts that major project ran less than smoothly, and Nochowitz was eventually removed from his position as business function leader. Nochowitz was told at the time by Ernst & Young partner Mike Suthard ("Suthard") that he was being replaced because Suthard felt that it was all Nochowitz' fault that the project had run seriously over budget (Nochowitz Dep. 61).

 At some point in July 1991 Ernst & Young reconfigured the organizational structure of its Great Lakes Management Consulting Group ("Great Lakes") practice by dividing what had previously been a number of industry-specific subgroups (such as health care, manufacturing, insurance, financial services, and retail) into two primary practice areas known as the Information Technology ("IT") Group and the Performance Improvement ("PI") Group. Nochowitz, who had formerly worked for the retail industry group in Chicago, joined the PI Group as one of its seven senior managers, six of whom (including Nochowitz) were based in Chicago (D. 12(m) Ex. H (1991 GLMC Retail Strategic Plan) at 8). Of those senior managers, only Nochowitz and Charles Harrison ("Harrison") had previously practiced their trade in the retail consulting group. *fn6" Harrison is a year older than Nochowitz.

 At roughly the same time that the reorganization was implemented, the Great Lakes managing directors held a meeting to review the unsatisfactory financial position of their consulting practice. Losses for the previous fiscal year had exceeded $ 7 million, and the higher-ups discussed how to turn that dismal picture around. Group Managing Director (and Ernst & Young partner) Robert McIlhattan ("McIlhattan") put the task in stark terms (Aff. P 2):

 
We were informed by the National office that we must generate a profit during the first quarter of the fiscal year of 1992, and if we were unable to do that it would force the National office to make draconian decisions regarding the practice.

 At least part of the problem stemmed from overstaffed management ranks (id.): For every partner in the Great Lakes practice there were nearly three senior managers, a ratio twice the recommended firm-wide 1:1.5 figure (id. P 8). In the period that followed, Ernst & Young reduced the number of Great Lakes partners from 20 to 16 and the number of senior managers from 55 to 43 (id.).

 To assist him in determining who was to be let go in the PI Group, based on an assessment of the relative skills of the various managers and senior managers, McIlhattan conferred with Ernst & Young partners with prior experience working in the group. After consultations with one of his partners, Jim Cross ("Cross"), McIlhattan made the decision that there was not enough work (either present or anticipated) to go around in the retail industry area, and Nochowitz was sent packing--or "asked to leave the firm," as D. 12(m) P 16 more delicately puts it (Cross Aff. P 4; McIlhattan Aff. P 3). *fn7"

 Nochowitz, who was told at the time by Cross and McIlhattan that his discharge was due to a reduction in force ("RIF") and a "national directive to downsize the consulting practice" (P. 12(n)(2) PP 29, 32), then brought this suit alleging that Ernst & Young had discriminated against him on the basis of his age in violation of ADEA. That has led in turn to the current Ernst & Young motion for summary judgment.

 Summary Judgment Principles

 Familiar Rule 56 principles impose on the movant the burden of establishing the lack of a genuine issue of material fact ( Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986)). For that purpose this Court is "not required to draw every conceivable inference from the record--only those inferences that are reasonable"--in the light most favorable to nonmovant Nochowitz ( Bank Leumi Le-Israel, B.M. v. Lee, 928 F.2d 232, 236 (7th Cir.1991) and cases cited there). While "this general standard is applied with added rigor in employment discrimination cases, where intent is inevitably the central issue" ( McCoy v. WGN Continental Broadcasting Co., 957 F.2d 368, 370-71 (7th Cir.1992)), that does not foreclose the potential for summary judgment in such cases ( Washington v. Lake County, 969 F.2d 250, 254 (7th Cir.1992)). Moreover, "a plaintiff facing the prospect of summary adjudication cannot 'sit back and simply poke holes in the moving party's summary judgment motion'" ( Young In Hong v. Children's Memorial Hosp., 993 F.2d 1257, 1261 (7th Cir.1993)).

 Burdens of Production and Persuasion

 By definition an ADEA plaintiff's success hinges on his ability to prove that he or she was fired because of age--that the employer's age-discriminatory animus was a "but for" cause of the employee's termination ( Darnell v. Target Stores, 16 F.3d 174, 177 (7th Cir. 1994)). Because he has no direct evidence that he was discharged for that prohibited reason, Nochowitz must perforce rely on indirect proof. And in a situation such as this one, the analysis of that proof is best approached through the methodology prescribed by McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802-04, 36 L. Ed. 2d 668, 93 S. Ct. 1817 (1973) and Texas Dep't of Comm'y Affairs v. Burdine, 450 U.S. 248, 252-53, 67 L. Ed. 2d 207, 101 S. Ct. 1089 (1981). *fn8" Under that methodology Nochowitz must first establish a prima facie case, at which point the burden would shift to Ernst & Young to articulate a legitimate, non-discriminatory explanation for Nochowitz' termination. *fn9" If Ernst & Young could do that (as every employer invariably manages to do), Nochowitz could prevail only by demonstrating *fn10" that the proffered reason was merely pretextual.

 If it is plain that an employee cannot demonstrate the pretextual nature of the employer's asserted reason for letting him go, there is really no point in going through the four-point analysis of the prima facie case (as Holmberg v. Baxter Healthcare Corp., 901 F.2d 1387, 1391 (7th Cir. 1990) teaches). In this instance Ernst & Young has followed its proof of its own bona fides (its lack of pretext) with a demonstration of Nochowitz' inability to establish the considerably easier elements of a prima facie case--but the issues are so intertwined that (as was done in Holmberg) this opinion will eschew the prima facie analysis and go directly to the question of pretext.

 Pretext Vel Non

 Nochowitz can demonstrate pretext either (1) by showing that Ernst & Young was more likely motivated by an age-discriminatory reason or (2) by showing that Ernst & Young's proffered reason is unworthy of credence ( Karazanos v. Navistar Int'l Transp. Corp., 948 F.2d 332, 336 (7th Cir. 1991); Lindsey v. Baxter Healthcare Corp., 962 F.2d 586, 588 (7th Cir. 1992)). *fn11" Here Nochowitz essays the second approach, as to which Anderson, 13 F.3d at 1124 has said, reflecting in part the same point made in n. 10 of this opinion:

 
However, for summary judgment purposes, the non-moving party, in this case the plaintiff, has a lesser burden. He must only "produce evidence from which a rational fact-finder could infer that the company lied" about its proffered reasons for his dismissal. Shager [v. Upjohn Co.,] 913 F.2d [398,] 401 [(7th Cir. 1990)]. As we said in Shager,
 
* * *
 
If the only reason an employer offers for firing an employee is a lie, the inference that the real reason was a forbidden one, such as age, may rationally be drawn. This is the common sense behind McDonnell Douglas.. . . The point is only that if the ...

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