Stephanie Kearns and Ronit Zivah Walker, Fed. Pub. Defenders, Paul S. Kish, Federal Defender Program, Inc., Atlanta, GA, for Petitioner-Appellant.
Henry Allen Moye, Atlanta, GA, for Respondent-Appellee.
Before BIRCH, CARNES and HULL, Circuit Judges.
This appeal requires us to determine whether a federal prisoner's unspecific reference to filing a 28 U.S.C. § 2255 motion in another § 2255 motion in a related case qualifies to equitably toll the statutory limitation period. Charles Larry Jones was convicted for his participation in a cocaine distribution conspiracy.1 His conviction and sentence of 292 months of imprisonment were affirmed by this court, and certiorari was denied by the United States Supreme Court on February 22, 1993. United States v. Eley, 958 F.2d 1083 (table) (11th Cir. 1992), cert. denied, DeFoor v. United States, 507 U.S. 916, 113 S. Ct. 1271, 122 L. Ed. 2d 666 (1993). On September 18, 2000, Jones filed his pro se, form § 2255 motion, which the district court denied as untimely; judgment was entered on November 20, 2000.
Jones then moved the district court to alter or amend the judgment and contended for the first time that the statute of limitations should have been equitably tolled. He argued that tolling was warranted because, in his § 2255 motion that was filed on March 28, 1997, in a related case concerning the same facts and pending at that time in the same district as this case, that he had stated: "I plan on filing a 2255 on my other case."2 R1-76; SR1-83-Ex. A-7. Jones makes the novel argument, which is one of first impression nationwide, that this unspecific reference in a related case notified the government of his prospective intention to file a § 2255 motion in this case and preserved his right to do so. The district judge denied the motion to alter or amend the judgment because Jones "failed to make a legal showing as to why his motion pursuant to 28 U.S.C. § 2255 should be considered timely filed." R1-77. Jones appeals the district judge's denial of his § 2255 motion to vacate, set aside, or correct his sentence as untimely and the order denying his motion to alter or amend the judgment based on equitable tolling of the one-year statute of limitations. Pursuant to the district court's certificate of appealability ("COA"), our review is "limited to the question of whether the pendency of a similar claim in another habeas proceeding operates to toll the one-year statute of limitations found in 28 U.S.C. § 2255."3 R1-82; see Murray v. United States, 145 F.3d 1249, 1251 (11th Cir. 1998) (per curiam) (holding that "appellate review is limited to the issues specified in the COA").
28 U.S.C. § 2255(1)-(4). We have held that a federal prisoner whose conviction became final prior to the effective date of the AEDPA, April 24, 1996, has one year, until April 23, 1997, to file a § 2255 motion. Goodman v. United States, 151 F.3d 1335, 1337-38 (11th Cir. 1998) (per curiam). Because Jones's conviction in this case was final with the denial of certiorari in his direct appeal by the United States Supreme Court5 prior to the effective date of the AEDPA, his one-year, statutory limitation period for filing his § 2255 petition terminated on April 23, 1997.6 Helton v. Secretary for the Dep't of Corrections, 259 F.3d 1310, 1312 (11th Cir. 2001) (per curiam), cert. denied, ___ U.S. ___, 122 S. Ct. 1965, 152 L. Ed. 2d 1025 (2002). Unless Jones is eligible for equitable tolling, his § 2255 motion was time barred when he filed it.7 Akins v. United States, 204 F.3d 1086, 1089 (11th Cir.), cert. denied, 531 U.S. 971, 121 S. Ct. 410, 148 L. Ed. 2d 316 (2000).
Because it is "an extraordinary remedy," Steed, 219 F.3d at 1300, equitable tolling has been permitted by federal courts "only sparingly," Irwin v. Department of Veterans Affairs, 498 U.S. 89, 96, 111 S. Ct. 453, 457, 112 L. Ed. 2d 435 (1990). A fundamental purpose for the AEDPA was to establish finality in post-conviction proceedings. Duncan v. Walker, 533 U.S. 167, 178, 121 S. Ct. 2120, 2127, 150 L. Ed. 2d 251 (2001); Williams v. Taylor, 529 U.S. 420, 436, 120 S. Ct. 1479, 1490, 146 L. Ed. 2d 435 (2000). In contrast to 28 U.S.C. § 2254, where federal habeas proceedings for state prisoners involve comity and federalism concerns in addition to finality, the Supreme Court has clarified that § 2255 does not implicate exhaustion or other collateral proceedings.8 See Duncan, 533 U.S. at 178-80, 121 S. Ct. at 2127-29. Since the Court has upheld "the signal purpose  animating AEDPA [a]s [being] the desire of Congress to achieve finality in criminal cases, both federal and state," through strict interpretation of the one-year limitation period for federal prisoners in § 2255, we must be cautious in analyzing a § 2255 petitioner's appellate issues not to "create a loophole which is contrary to the legislative intent of insuring a greater degree of finality."9 Brackett v. United States, 270 F.3d 60, 69 (1st Cir. 2001), cert. denied, ___ U.S. ___, 122 S. Ct. 1575, 152 L. Ed. 2d 495 (2002).
In the § 2255 context, equitable tolling "is appropriate when a movant untimely files because of extraordinary circumstances that are both beyond his control and unavoidable even with diligence." Sandvik v. United States, 177 F.3d 1269, 1271 (11th Cir. 1999) (per curiam); see Calderon v. United States Dist. Court, 128 F.3d 1283, 1288 (9th Cir. 1997) ("Equitable tolling will not be available in most cases, as extensions of time will only be granted if `extraordinary circumstances' beyond a prisoner's control make it impossible to file a petition on time."). "The `extraordinary circumstances' standard applied in this circuit focuses on the circumstances surrounding the late filing of the habeas petition, rather than the circumstances surrounding the underlying conviction." Helton, 259 F.3d at 1314-15. The petitioner has the burden of proving entitlement to equitable tolling by showing that "extraordinary circumstances that were both beyond his control and unavoidable even with diligence" prevented filing the petition on time. Akins, 204 F.3d at 1090; see Trenkler v. United States, 268 F.3d 16, 25 (1st Cir. 2001) (stating that the § 2255 petitioner "bears the burden of establishing the basis for" equitable tolling); Miller v. New Jersey State Dep't of Corrections, 145 F.3d 616, 618-19 (3d Cir. 1998) (recognizing "that equitable tolling is proper only when the `principles of equity would make [the] rigid application [of a limitation period] unfair' .... [and that a] petitioner must show that he or she `exercised reasonable diligence in investigating and bringing [the] claims'" (third alteration added) (internal citations omitted)). Federal courts "must examine each case on its facts" and apply statutory law and controlling precedent to determine if a particular request qualifies for equitable tolling of the unequivocal, one-year limitation period. Fisher v. Johnson, 174 F.3d 710, 713 (5th Cir. 1999), cert. denied, 531 U.S. 1164, 121 S. Ct. 1124, 148 L. Ed. 2d 991 (2001); see 28 U.S.C. § 2255.
Jones's appointed appellate counsel offers three reasons for his failure to file his § 2255 motion within the one-year limitation period that allegedly qualify for equitable tolling.10 The first is that the government had notice that Jones's § 2255 motion was going to be filed in this case because of his unspecific reference in his other § 2255 motion, filed timely in a similar case in the same district with the same counsel, that he was going to file a § 2255 motion in his "other" case, purportedly meaning this case. This argument is fraught with problems, not the least of which is the fact that Jones has provided no direct authority for his innovative proposition, and we have found none.
Jones has misapprehended the notice requirement concerning the one-year limitation period, which derives from the mandatory language of § 2255 as well as his burden of proof. See 28 U.S.C. § 2255 ("A 1-year period of limitation shall apply to a motion under this section." (emphasis added)). The onus is on Jones, not on the government, to show why he did not file his § 2255 motion within the statutory limitation period. His deflective notice argument misses the issue and misconstrues his burden of proof.
Even if Jones's notice argument were colorable, he failed to provide specific notice that he meant this case. It is impracticable to expect the government, inundated with numerous prisoners' cases, to parse any petitioner's other cases to find an unspecific reference to filing a collateral motion in another case and to know which case is meant. We will not place such an unrealistic burden on the government.
nothing prevented [petitioner] from filing a § 2255 motion while his Rule 33 motion was pending, just as nothing compelled him to file a motion under Rule 33 in the first place rather than seeking relief under § 2255.
That he felt it prudent to wait for the completion of yet another round of litigation before filing a motion under § 2255 does not excuse his failure to comply with the one-year limitations period.
Trenkler, 268 F.3d at 26 (emphasis added); see Prescott, 221 F.3d at 689 ("In light of the unambiguous language of the statute and Congress' knowing rejection of an exhaustion requirement for § 2255, we would be guilty of judicial legislation were we to grant the relief [petitioner] requests."). Otherwise, "every defendant seeking to file an untimely § 2255 motion could do an end-run around the AEDPA limitation period by filing a timely, but ultimately meritless, Rule 33 motion." Johnson v. United States, 246 F.3d 655, 659 (6th Cir. 2001) (treating Rule 33 motion based on newly discovered evidence of false testimony at trial after the finality of direct review and filed after the ten-day period provided in Federal Rule of Appellate Procedure 4(b) (3) as a collateral challenge for the purpose of filing an untimely § 2255 motion outside the one-year limitation period).
Jones does not contend that newly discovered evidence or any specific cause was the reason for the delay in filing his § 2255 motion in this case within the one-year limitation period. Instead, he relies on his unspecific notice in his timely filed § 2255 motion in another case.12 When even newly discovered evidence following finality of direct appeal has been determined to be ineligible for equitable tolling of the one-year § 2255 limitation period, we readily conclude that Jones's unspecific notice argument in another § 2255 case is an unsatisfactory explanation for his lack of diligence in filing his § 2255 motion in this case and an insufficient reason for the rare use of equitable tolling for failing to file his § 2255 motion within the statutory limitation period. See Irwin, 498 U.S. at 96, 111 S. Ct. at 458 ("We have generally been much less forgiving in receiving late filings where the claimant failed to exercise due diligence in preserving his legal rights.").
Our cases, however, indicate that equitable tolling based on relation back is inappropriate. We have recognized that Rule 15(c) "`has been revised to prevent parties against whom claims are made from taking unjust advantage of otherwise inconsequential pleading errors to sustain a limitations defense.'" Pruitt v. United States, 274 F.3d 1315, 1318 (11th Cir. 2001) (quoting Advisory Committee Note to 1991 Amendments to Rule 15). This case does not involve a technical pleading error, but an attempt to evade a statutory limitation period. See Mederos v. United States, 218 F.3d 1252, 1254 (11th Cir. 2000) (vacating district court's dismissal of petitioner's second § 2255 motion as time barred when it "cured the initial § 2255 motion's technical deficiency" of petitioner's failure to sign it). This "relatively narrow purpose" of Rule 15(c) can be thwarted in the post-conviction context: "the effective date of the claims made in amendments to habeas corpus petitions [would be] irrelevant, because if the claim could not be added by amendment, it could be asserted by subsequent petition that would not be barred by any limitations period."16 Pruitt, 274 F.3d at 1318. Additionally, allowing such amendments "would effectively require the government to prepare its case a second time," which is not an equitable remedy. Id. at 1319.
Significantly, " [u]nder Rule 12 of the Rules Governing § 2255 Proceedings, a district court may apply the Federal Rules of Civil Procedure in a lawful manner not inconsistent with the Rules Governing § 2255 Proceedings." Mederos, 218 F.3d at 1254 (emphasis added).
A motion shall be limited to the assertion of a claim for relief against one judgment only of the district court. If a movant desires to attack the validity of other judgments of that or any other district court under which he is in custody or may be subject to future custody, as the case may be, he shall do so by separate motions.
Rules Governing § 2255 Proceedings 2(c) (emphasis added). Under this rule, Jones cannot join his two § 2255 motions through amendment or otherwise. This argument is a thinly veiled attempt to escape the strictures of a clear statutory-limitation period. Jones's "current predicament" plainly results from "his inattention to the limitation period of § 2255." Prescott, 221 F.3d at 688.
Finally, Jones's counsel contends that, since his § 2255 motions were pro se and based on the same facts and law, these motions should be liberally construed together to capture the timely filing of the first § 2255 motion to preserve this second petition. Similar to his relation-back argument, the cases cited for this proposition do not concern joining two separate cases by using the statutory limitation period for a timely filed § 2255 motion in one case to save an untimely filed § 2255 motion in another case.17 Our court has determined that a petitioner's § 2255 motion, raising ineffective assistance of counsel, is an unavailable, successive petition when a district judge recharacterizes a Rule 33 motion as both a Rule 33 and § 2255 motion. O'Ryan Castro v. United States, 290 F.3d 1270, 1273-75 (11th Cir. 2002). Not only did we strictly "apply the AEDPA restrictions to successive § 2255 petitions," id. at 1274, but also we stated that "the ineffective assistance of counsel claim was available to [petitioner] at the time he filed his initial motion for new trial, and he had an opportunity to raise this claim during the adjudication of his recharacterized § 2255 petition," id. at 1273.
Jones's reiterated statements that the facts are identical in his two § 2255 motions as a means to join them for the purpose of securing a timely filing date for this untimely § 2255 motion belie his liberal-construction argument. He plainly did know the one-year statutory limitation period because his first § 2255 motion was filed timely. Cf. Felder v. Johnson, 204 F.3d 168, 171-73 (5th Cir.) (holding that ignorance of the law is insufficient rationale for equitable tolling), cert. denied, 531 U.S. 1035, 121 S. Ct. 622, 148 L. Ed. 2d 532 (2000). Because the facts are the same, Jones could have timely filed both of his § 2255 motions within the one-year statutory limitation period. " [T]he fact that a statute of limitations creates certain inefficiencies or inconveniences hardly qualifies as an `extraordinary circumstance' that `prevent [s]' a litigant from complying with the strictures of the applicable limitations period." Trenkler, 268 F.3d at 25 (citation omitted) (first alteration added). Significantly, an inefficiency consideration is irrelevant in the context of a mandatory statute-of-limitations period; the issue is not whether a district court "should have decided" petitioner's § 2255 motion while his Rule 33 motion was pending, but "when [petitioner] should have filed" his § 2255 motion. Id. Equitable tolling does not apply "to what is at best a garden variety claim of excusable neglect." Irwin, 498 U.S. at 96, 111 S. Ct. at 458.
In both cases, Jones asserted ineffective assistance of counsel for failing to suppress wiretap evidence. Jones's first § 2255 motion in a related case in which the subject reference was made has been concluded Jones v. United States, 224 F.3d 1251 (11th Cir. 2000).
We denied Jones's motion to expand the certificate of appealability "because appellant has failed to make a substantial showing of the denial of a constitutional right."Jones v. United States, No. 01-13191 (11th Cir. Oct. 19, 2001); see 28 U.S.C. § 2253(c) (2).
We have determined that cases interpreting the equitable tolling of the statute of limitations in 28 U.S.C. § 2244 are "equally valid" in § 2255 cases Sandvik v. United States, 177 F.3d 1269, 1271 (11th Cir. 1999) (per curiam); see Brackett v. United States, 270 F.3d 60, 66 (1st Cir. 2001) ("The Supreme Court commonly interprets § 2255 and § 2254 in light of each other."), cert. denied, ___ U.S. ___, 122 S. Ct. 1575, 152 L. Ed. 2d 495 (2002). Although the issue of equitable tolling was not raised until Jones's motion to alter or amend judgment, for which the review standard is abuse of discretion, Raney v. Aware Woman Center for Choice, Inc., 224 F.3d 1266, 1268 (11th Cir. 2000) (per curiam), cert. denied, 532 U.S. 971, 121 S. Ct. 1602, 149 L. Ed. 2d 468 (2001), "the result of this appeal would not be different whether our review here was de novo or for abuse of discretion," Saxton v. ACF Indus., Inc., 239 F.3d 1209, 1212 n. 2 (11th Cir.), vacated, 244 F.3d 830 (11th Cir.) (en banc), reh'g en banc on other grounds, 254 F.3d 959 (11th Cir. 2001).
Our circuit has determined that a conviction is final on the day that the Supreme Court denies a convicted defendant's certiorari petition or renders a decision on the merits Washington v. United States, 243 F.3d 1299, 1300-01 (11th Cir. 2001) (per curiam).
The finality of Jones's conviction in this case is the only applicable date of the four statutory dates in § 2255 (1)-(4). No unconstitutional or unlawful act by the government prevented Jones from filing his § 2255 motion within the one-year limitation period, and the Supreme Court has not recently recognized a right retroactively applicable to § 2255 cases See 28 U.S.C. § 2255(2), (3). Jones does not state that the one-year limitation period under § 2255 should be calculated from a date, when through the exercise of due diligence, he discovered the facts supporting his arguments for relief. See 28 U.S.C. § 2255(4); cf. Brackett v. United States, 270 F.3d 60, 68 (1st Cir. 2001) (holding that subsequent vacating of underlying state convictions used to enhance a federal sentence did not qualify as newly discovered facts from which the one-year statutory limitation period should be calculated), cert. denied, ___ U.S. ___, 122 S. Ct. 1575, 152 L. Ed. 2d 495 (2002).
Although Jones's pro se § 2255 motion was filed in the District Court for the Northern District of Alabama on September 22, 2000, under the "mailbox rule," we deem it filed on the date that he delivered it to prison authorities for mailing, presumptively, September 18, 2000, the day that he signed it Washington, 243 F.3d at 1301. This distinction, however, is inconsequential to the timeliness of Jones's § 2255 motion in this case because the one-year limitation period expired on April 23, 1997, since his conviction was final before the effective date of the AEDPA. Goodman, 151 F.3d at 1337-38.
The 1-year limitation period of § 2244(d) (1) quite plainly serves the well-recognized interest in the finality of state court judgments. This provision reduces the potential for delay on the road to finality by restricting the time that a prospective federal habeas petitioner has in which to seek federal habeas review.
By tolling the limitation period for the pursuit of state remedies and not during the pendency of application for federal review, § 2244(d) (2) provides a powerful incentive for litigants to exhaust all available state remedies before proceeding in the lower federal courts.
Id. at 179, 180, 121 S. Ct. at 2128 (emphasis added) (citation omitted). Comparing the one-year limitation period in § 2244(d) (1) with that of § 2255(1)-(4), the Court noted that " [a] diminution of statutory incentives to proceed first in state court would also increase the risk of the very piecemeal litigation that the exhaustion requirement is designed to reduce." Id. at 180, 121 S. Ct. at 2128.
[A]ny invocation of equity to relieve the strict application of a statute of limitations must be guarded and infrequent, lest circumstances of individualized hardship supplant the rules of clearly drafted statutes. To apply equity generously would loose the rule of law to whims about the adequacy of excuses, divergent responses to claims of hardship, and subjective notions of fair accommodation. We believe, therefore, that any resort to equity must be reserved for those rare instances where — due to circumstances external to the party's own conduct — it would be unconscionable to enforce the limitation period against the party and gross injustice would result.
Harris v. Hutchinson, 209 F.3d 325, 330 (4th Cir. 2000).
Section 2244(d) (1)'s limitation period and § 2244(d) (2)'s tolling provision, together with § 2254(b)'s exhaustion requirement, encourage litigants first to exhaust all state remedies and then to file their federal habeas petitions as soon as possible.
[O]ur sole task in this case is one of statutory construction, and upon examining the language and purpose of the statute, we are convinced that § 2244(d) (2) does not toll the limitation period during the pendency of a federal habeas petition.
Id. at 181, 121 S. Ct. at 2129 (third emphasis added). If a timely filed § 2244 habeas petition will not toll the one-year limitation period for an untimely filed, second § 2254 petition, where there are comity and exhaustion concerns relative to state courts, then a timely filed § 2255 motion clearly will not toll the one-year limitation period for a second, untimely filed § 2255 motion, where the issues of comity and exhaustion of state remedies are not present. See Trenkler, 268 F.3d at 23 ("Federal habeas review of state convictions under § 2254 implicates principles of comity that are inapplicable in the context of federal review of federal convictions under § 2255."); Prescott, 221 F.3d at 689 ("Moreover, § 2244(d) indicates Congress was aware of tolling issues regarding post-conviction relief proceedings, yet chose not to add an exhaustion requirement for post-trial motions to § 2255.").
Jones's counsel repeatedly states that both cases in which Jones filed § 2255 motions are based on the same facts and law See, e.g., Petitioner's Brief at 4 ("Upon the issuance of the [first] opinion, Mr. Jones immediately filed a second pleading, making the identical ineffective assistance of counsel claim regarding the sealing of the wiretap evidence." (emphasis added)); id. at 7 ("Mr. Jones's initial petition put the government on immediate notice that he would challenge both judgments against him — charges originally levied in one indictment and based on identical wiretap audiotapes." (emphasis added)); id. at 9 ("Mr. Jones had the same counsel in each case, and filed not only a similar, but an identical claim of ineffective assistance against this attorney."); id. at 11 ("In fact, Petitioner filed an identical claim in his subsequent petition, and noted that he had preserved his claim in the prior petition."); id. at 17-18 ("Mr. Jones's allegations all arise out of the same set of facts — his counsel was ineffective for failing to suppress wiretap evidence." (emphasis added)).
Pruitt v. United States, 274 F.3d 1315 (11th Cir. 2001) (per curiam); Mederos v. United States, 218 F.3d 1252 (11th Cir. 2000); Davenport v. United States, 217 F.3d 1341 (11th Cir. 2000), cert. denied, 532 U.S. 907, 121 S. Ct. 1232, 149 L. Ed. 2d 141 (2001). Petitioner's Brief at 16-18.
Among the cases quoted by Jones's counsel is the seminal case for pro se, liberal-construction jurisprudence,Haines v. Kerner, 404 U.S. 519, 92 S. Ct. 594, 30 L. Ed. 2d 652 (1972) (per curiam), which concerns construing a prisoner's pro se complaint to withstand a Federal Rule of Civil Procedure 12(b) (6) challenge and not timely filing within a statutory limitation period. Petitioner's Brief at 19 & 21. Also inapposite is the quotation from Irwin, which, quoted in full, states: "We have allowed equitable tolling in situations where the claimant has actively pursued his judicial remedies by filing a defective pleading during the statutory period, or where the complainant has been induced or tricked by his adversary's misconduct into allowing the filing deadline to pass." 498 U.S. at 96, 111 S. Ct. at 457-58 (emphasis added); Petitioner's Brief at 19 & 24. Jones did not actively pursue this § 2255 motion during the applicable statutory limitation period.
Regarding the law in our circuit, Jones's counsel quotes from Fernandez v. United States, 941 F.2d 1488 (11th Cir. 1991), that " [t]his court has a duty to `liberally construe [a pro se litigant's] assertions to discern whether jurisdiction to consider his motion can be founded on a legally justifiable base.'" Petitioner's Brief at 19 & 21 (quoting Fernandez, 941 F.2d at 1491). Yet, the Fernandez panel determined that the prisoner/petitioner's collateral attack on his sentence through a motion under Federal Rule of Criminal Procedure 35(b) was denied correctly by the district judge as untimely for failure to file within the statutory period: "A court has no authority to extend the 120-day period and has no jurisdiction over a Rule 35(b) motion filed after the period runs." Fernandez, 941 F.2d at 1492. Jones's quotations from United States v. Grant, 256 F.3d 1146 (11th Cir. 2001), are misapplied because Grant concerns the proper filing of a notice of appeal under Federal Rule of Appellate Procedure 4(b) and not a § 2255 motion. Petitioner's Brief at 21 & 22. Critical to our court's permitting the appeal when Grant, who had two convictions, had omitted one of the case numbers from his timely notice of appeal and thus filed a second, untimely notice of appeal, was because "a consolidated sentencing hearing on both cases was held in the district court, and there was only one judgment and commitment order entered for both cases." Id. at 1151. The timely § 2255 motion that Jones seeks to amend or join with his untimely § 2255 motion for the purpose of complying with the statutory limitation period is from a separate criminal trial and judgment. In contrast to Grant, these convictions were not consolidated for sentencing.
Given the mandatory one-year-limitation period in § 2255, Jones's filing a timely § 2255 motion in his related case based on the same facts, and our circuit requirements for equitable tolling, the district judge did not err in not according Jones a hearing before ruling on his § 2255 motion See In re Boshears, 110 F.3d 1538, 1541 n. 1 (11th Cir. 1997) (recognizing that "hearing and findings of fact [are] not required for [a] § 2255 motion where `the files and records of the case conclusively show that the prisoner is entitled to no relief'" (quoting 28 U.S.C. § 2255)). Moreover, Jones did not raise the issue that the statutory-limitation period was equitably tolled until his § 2255 motion had been denied.


COPYRIGHT MATERIAL OMITTED Ray Twohig, Albuquerque, NM, for Plaintiff-Appellant Paul "Mike" Pippin.
Bradley T. Cave, Holland & Hart, LLP, Cheyenne, Wyoming (Michael L. Carrico and George McFall, Modrall, Sperling, Roehl, Harris & Sisk, Albuquerque, New Mexico, and Elizabeth A. Phelan, Holland & Hart, LLP, Boulder, Colorado, with him on the briefs), for Defendant-Appellee Burlington Resources Oil and Gas Company.
Before TACHA, Chief Circuit Judge, EBEL, and McCONNELL, Circuit Judges.
Paul "Mike" Pippin ("Pippin") brought this employment discrimination action against his former employer, Burlington Resources Oil and Gas Company ("Burlington"). Pippin alleges that his termination was the product of illegal age discrimination in violation of the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. §§ 621-34. Burlington, however, claims to have fired Pippin pursuant to a larger reduction in force ("RIF") and because of Pippin's consistently poor work performance.
Before the district court, Pippin alleged both disparate treatment and disparate impact theories of age discrimination. While this appeal was pending, the Supreme Court decided Smith v. City of Jackson, 544 U.S. 228, 125 S. Ct. 1536, 161 L. Ed. 2d 410 (2005), which holds that disparate impact theories of age discrimination are cognizable under ADEA. This overrules our prior opinion in Ellis v. United Airlines, Inc., 73 F.3d 999 (10th Cir. 1996).
The district court granted summary judgment for Burlington, and Pippin appeals. Exercising jurisdiction pursuant to 28 U.S.C. § 1291, we AFFIRM.
Pippin worked for Burlington Resources for ten years in the position of Senior Engineer.1 In the spring of 2000, Burlington began a corporate restructuring in which it "realigned" its geography-based organization into a function-based one. Burlington's realignment eliminated the high-risk exploration activities in the San Juan Division, and this in turn resulted in a RIF within the division.
To implement this RIF, Mark Ellis, Vice President of the San Juan Division, asked the division's managers to review the organization's future needs and to select the "best performers" to retain. Best performers were selected based on past performance reports and by comparing individuals' skill sets to the organization's future needs. Ultimately, the San Juan Division terminated nineteen employees on or about April 27, 2000, including Pippin, who was fifty-one years old at the time.
Burlington evaluated its engineers and technical staff annually to determine the size of bonus awards. Burlington's evaluation process called for each employee's supervisor to prepare a draft evaluation, and then to meet with other supervisors collectively to discuss and rank each employee compared to all other employees with the same job position.
Burlington compiled its evaluations on a ranking form that compared employees in three categories: Rank, which ranked employees within a particular employment category; Rating, which gave each employee a letter grade of SE+ or SE [significantly exceeds expectations]; E+ or E [exceeds expectations]; M+ or M [meets expectations]; and Percent Bonus, which showed what percent of eligible bonuses each employee actually earned.
Pippin's annual evaluations indicate he performed well in many technical aspects of his job; however, in the words of the district court, "he lacked certain `soft skills' and was repeatedly told to improve his relationship with management and fellow co-workers." As the district court summarized, "Burlington Resources viewed the Plaintiff as one of its worst employees for a number of years and ultimately terminated his employment."
This has become a repetitive theme: You need to quit having a strong confrontational attitude about Division management. You need to become part of the solution, or you are part of the problem. Continue to build technical, not experience-based, production engineering skills. Quit relying so much on your experience, prove your ideas with data.
In 1998, Pippin was ninth out of eleven senior engineers, and his comments included: Mike needs to dramatically improve his versatility to build endorsement from others. He has made some improvements this year in improving his soft skills, and he has looked for opportunities to mentor others and had some success. Mike needs to make an immediate, decisive shift in how he supports our efforts at BR however, for him to progress in his career here. Mike has had several opportunities recently to build endorsement with Division management and staff, and has avoided making that commitment. Consequently, Mike has low endorsement from the management staff and me that he needs to take steps to rebuild.
In the years leading up to 1998, Pippin's rankings consistently placed him in or near the bottom half of his colleagues, and his supervisors' comments uniformly indicated his greatest development needs were in the area of "soft skills," including particularly communication and teamwork.
Although there does seem to be a pattern of Pippin struggling with his "soft skills" at Burlington, and he was ranked last among his Senior Engineer peers in 1999, he did have several positive performance comments in all of the evaluations in the record. For example, Pippin's listed "strengths" in his 1999 evaluation include " [b]road-based experiential production engineering and field skills," being a "self-starter," producing a " [h]igh quantity of sound field engineering work," and " [p]lanning, prioritization, and organizational skills."
In 1999, the lowest ranked engineer overall was Craig McCracken, Engineer Advisor, who received 50 percent of his eligible bonus. Five engineers received only 60 percent of their eligible bonuses and thus were tied for the second-to-last ranking among all engineers in 1999. These engineers were Pippin, Senior Engineer; Ralph Nelms, Senior Staff Engineer; Harry Benson, Engineer Advisor; J.A. Michetti, Engineer I; and K.M. Collins, Engineer II.
Of the nineteen employees terminated in the 2000 RIF, three were engineers. Burlington terminated Pippin, Nelms, and Benson; however, McCracken, Michetti, and Collins were retained. According to Burlington, McCracken was kept because he possessed unique "critical" skills.3 Further, Burlington points out that Michetti was a new hire in June 1999; therefore, his eligible bonus was prorated, and based on his short evaluation period Burlington decided not to include him in the April 2000 RIF. Finally, Collins had a higher rating than either Pippin, Nelms, or Benson in 1998, receiving 90 percent of his eligible bonus while Pippin and Benson both received only 70 percent and Nelms received a prorated 60 percent bonus.
All three of the engineers terminated in the 2000 RIF were over forty.4 McCracken, who was retained, was also over forty. However, both Michetti and Collins were under forty in 2000. Pippin also notes that the 2000 RIF affected three out of the fourteen over-forty engineers but none of the twenty-two under-forty engineers.
In the fall of 1999, prior to any discussion of the April 2000 RIF, Burlington extended four offers to new engineers coming straight out of college. After the RIF was announced, Burlington "decided to honor those [offers] and hire those people, because we did not want our reputation as a company to be destroyed on those campuses of which those individuals went to school." Burlington also hired Michetti ten months prior to the April 2000 RIF, and eight months after the 2000 RIF, Burlington hired another under-forty engineer.
Finally, Pippin also points out that fourteen of the nineteen employees terminated in the 2000 RIF were over forty; however, Pippin has failed to give us any statistical information about how this compares to the ages of the entire universe of Burlington's San Juan workforce.
Pippin received a right to sue letter from the EEOC on August 3, 2001. Pippin timely filed this case in federal court on November 1, 2001, alleging (1) violation of the Age Discrimination in Employment Act ("ADEA"); (2) violation of a parallel New Mexico Human Rights Act; (3) breach of an implied employment contract; and (4) intentional infliction of emotional distress. Before the district court, Plaintiff conceded Defendant was entitled to summary judgment on the two state common law claims; accordingly, they were dismissed and are not before us on appeal. The district court then granted Burlington summary judgment on Pippin's ADEA and state discrimination claims on July 21, 2003. Pippin filed a motion to reconsider, which the court denied on June 9, 2004. This timely appeal followed on June 29, 2004. Pippin raises only his ADEA claims for our review.
Pippin appeals both the district court's grant of summary judgment in Defendant's favor, and the court's denial of Plaintiff's motion to reconsider under Fed. R. Civ. P. 59(e). Because Plaintiff's Rule 59 motion was timely, we are permitted on this appeal to consider both the Rule 59 motion and the merits of the underlying judgment. See Hawkins v. Evans, 64 F.3d 543, 546 (10th Cir. 1995).
The district court had jurisdiction over this civil action pursuant to 28 U.S.C. §§ 1331, 1343, and we have jurisdiction pursuant to 28 U.S.C. § 1291.
"We review the ... grant of summary judgment de novo, applying the same legal standard used by the district court." Simms v. Okla. ex rel. Dep't of Mental Health & Substance Abuse Servs., 165 F.3d 1321, 1326 (10th Cir. 1999). Summary judgment is proper if the evidence, viewed in the light most favorable to the non-moving party, presents no genuine issue of material fact and the court finds the moving party is entitled to judgment as a matter of law. Id.
Pippin asserts that the district court erred by permitting Burlington to attach several new exhibits to its summary judgment reply brief but did not offer Pippin an additional opportunity to respond to that material.5 Whether a non-moving party has had an opportunity to respond to a moving party's reply brief at the summary judgment stage is a "supervision of litigation" question that we review for abuse of discretion. Beaird v. Seagate Tech., Inc., 145 F.3d 1159, 1164-65 (10th Cir. 1998). Pippin raised this issue in a Rule 59 motion before the district court, the denial of which we also review for abuse of discretion. Adams v. Reliance Standard Life Ins. Co., 225 F.3d 1179, 1186 n. 5 (10th Cir. 2000).
We find no abuse of discretion in this case. The district court correctly pointed out that approximately a month and a half passed between Burlington filing its reply and the district court's decision. Pippin had plenty of opportunity to seek leave of the court to file a surreply but never attempted to do so.
Our case law requires only that "if the court relies on new materials or new arguments in a reply brief, it may not forbid the nonmovant from responding to these new materials." Beaird, 145 F.3d at 1165; accord Doebele v. Sprint/United Mgmt. Co., 342 F.3d 1117, 1139 n. 13 (10th Cir. 2003). Or, if the district court does preclude a surreply, then the court can avoid error only by not relying on the new materials and arguments in the movant's reply brief. Beaird, 145 F.3d at 1164.
The substance of this appeal is devoted to Pippin's claim that he was disparately treated on the basis of his age in violation of ADEA, 29 U.S.C. § 621(a). Because there is no direct evidence of age discrimination, the McDonnell Douglas burden-shifting scheme applies to this disparate treatment claim. Garrett v. Hewlett-Packard Co., 305 F.3d 1210, 1216 (10th Cir. 2002). Thus, Plaintiff must first establish a prima facie case of age discrimination in a RIF by showing: (1) Plaintiff was within a protected age group; (2) he was doing satisfactory work; (3) he was discharged despite the adequacy of his work; and (4) there is some evidence the employer intended to discriminate against him in reaching its RIF decision. Beaird, 145 F.3d at 1165; see also Rea v. Martin Marietta Corp., 29 F.3d 1450, 1454 (10th Cir. 1994). This fourth element may be established "through circumstantial evidence that the plaintiff was treated less favorably than younger employees during the [RIF]." Beaird, 145 F.3d at 1165 (quotation omitted).
If Plaintiff establishes a prima facie case, the burden of production shifts to the Defendant to rebut this presumption of discriminatory intent by asserting a legitimate, nondiscriminatory reason for the employment decision. Id. Once the Defendant meets this burden of production, "the burden shifts back again to the plaintiff to show that the defendant's proffered reasons were a pretext for discrimination." Rea, 29 F.3d at 1455.
In other words, Plaintiff must then resist summary judgment by presenting evidence that the proffered reason was "`unworthy of belief.'" Beaird, 145 F.3d at 1165 (quoting Randle v. City of Aurora, 69 F.3d 441, 451 (10th Cir. 1995)). At this point, the presumption of discrimination established by the prima facie showing simply "drops out of the picture," and the analysis shifts to the plaintiff's ultimate burden of showing that the defendant discriminated on the illegal basis of age. Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 143, 120 S. Ct. 2097, 147 L. Ed. 2d 105 (2000).
There is no dispute that the first two steps of this analysis are satisfied here. Pippin at least met expectations as a Senior Engineer, and he was arguably treated less favorably than younger engineers— including Bobby Goodwin, thirty-three, who testified he picked up Pippin's paperwork and "made it my own and continued what he did." Defendant's nondiscriminatory reason for terminating Pippin is similarly satisfied as Burlington asserts Pippin was terminated due to the RIF and Pippin's substandard performance. Thus, the only issue before us is "whether Plaintiff has presented specific facts significantly probative to support an inference that Defendant's proffered justifications were a pretext for discrimination." Rea, 29 F.3d at 1455; accord Reeves, 530 U.S. at 147-49, 120 S. Ct. 2097.
"In a RIF case, a plaintiff can demonstrate pretext in three principal ways." Beaird, 145 F.3d at 1168. That is, Pippin can present evidence that (1) his own termination does not accord with the RIF criteria, (2) Defendant's RIF criteria were deliberately falsified or manipulated in order to terminate him, or (3) that the RIF generally was pretextual. This third approach is sometimes satisfied by a showing that the defendant actively sought to replace a number of RIF-terminated employees with new hires during the RIF general time frame. Id. In a typical non-RIF context, we have also said a showing of pretext can look to "prior treatment of plaintiff; the employer's policy and practice regarding minority employment (including statistical data); disturbing procedural irregularities (e.g., falsifying or manipulating... criteria); and the use of subjective criteria." Garrett, 305 F.3d at 1217 (quotation omitted).
Summarizing Pippin's claims on appeal, he asserts (1) the RIF itself was pretextual; (2) Pippin's evaluations, on which the RIF decisions were partly based, were not objective and were manipulated to pervert what was actually a good performance on Pippin's part; and (3) Burlington has a history and pattern or practice of discriminating based on age.
Pippin says the RIF itself was pretextual because Burlington hired four new college recruits in the summer of 2000, just a few months after the April RIF, and made two other under-forty engineer hires in an eighteen-month period surrounding the RIF. Pippin says this "eliminates the concept of RIF" and poses a "glaring contradiction" in that, in the face of a RIF, Burlington actually hired new engineers.
Burlington, however, presented evidence that the offers to these "college hires" had been extended in November 1999, before any talk of a RIF was in the wind, and that Burlington "decided to honor those [offers] and hire those people, because we did not want our reputation as a company to be destroyed on those campuses of which those individuals went to school."
As for the two under-forty hires in the eighteen-month period surrounding the April 2000 RIF, Pippin has provided no details about their qualifications or what job functions they assumed, which makes a comparison to Pippin's abilities and treatment nearly impossible. Moreover, at least for the hiring decision made ten months before the RIF, the record is clear that no one at Burlington's San Juan Division knew to anticipate a RIF at that time. The decision to hire a new engineer eight months after a RIF also fails to account for any non-RIF-related terminations or resignations from within the engineer pool, and that decision is fairly remote from the RIF decision.
Pippin has presented no evidence, other than his own opinions of how a business should be run, to refute these otherwise legitimate considerations. Indeed, our cases have previously held that leaving out new employees from RIF decisions does not establish pretext. See Fallis v. Kerr-McGee Corp., 944 F.2d 743, 745 (10th Cir. 1991).
Next, Pippin argues that his "replacement" by Goodwin, a younger engineer, also eliminates the concept of a RIF.
Where an employee is selected for RIF termination "solely on the basis of position elimination," qualifications become irrelevant and one way that employee can show pretext is to present evidence that his job was not in fact eliminated but instead remained "a single, distinct position." Furr v. Seagate Tech., Inc., 82 F.3d 980, 988 (10th Cir. 1996); see also Abuan v. Level 3 Commc'ns, Inc., 353 F.3d 1158, 1169 (10th Cir. 2003).
Here, however, Burlington reduced its overall complement of petroleum engineers based on a combination of past performance and skill set matches.8 The fact that Pippin's employment duties were assumed by another employee does not establish pretext. Moreover, Burlington established that Goodwin was an exceptional performer, receiving the highest possible rating in both 1999 and 1998. Indeed, Goodwin earned 100 percent of his eligible bonus in 1999 and 120 percent of it in 1998.
Finally, Pippin argues that, because Burlington's larger restructuring resulted in the elimination of the high-risk exploration projects in the San Juan Basin, and Pippin was not involved in these high-risk projects, any RIF that subsequently included him was pretextual.
Burlington responds that "it would show poor business judgment to terminate the higher performers just because they were working on a high risk project at the time, where such higher performers could readily shift into remaining job functions." This conforms with the testimony that RIF-terminated employees were selected after reviewing what the organizational needs were and then determining who the "best performers" were to meet those needs into the future. We see no reason to second-guess these business judgments or to infer that Burlington's RIF itself was pretextual.
Pippin also argues he has presented evidence of pretext because his evaluations were too subjective. He complains, in particular, that the process included input from other supervisors and the possibility of changes being imposed by higher-level managers.
Our cases have regularly affirmed grants of summary judgment for employers who based RIF terminations on employee rankings. E.g., Rea, 29 F.3d at 1456; Fallis, 944 F.2d at 744. The subjective nature of the evaluations may be a factor to consider in pretext but it ordinarily is not by itself sufficient to establish pretext. Furr, 82 F.3d at 987 ("the use of subjective criteria does not suffice to prove intentional age discrimination."); see also Simms, 165 F.3d at 1328 ("Evidence of pretext may include ... the use of subjective criteria."); Bauer v. Bailar, 647 F.2d 1037, 1046 (10th Cir. 1981) (noting that although subjective criteria are not wrongful per se, it does "provide  an opportunity for unlawful discrimination").
Nonetheless, Pippin cites language from one of our subsequent non-RIF ADEA cases where we said " [a]bsent evidence that [the employer's] system of ranking and evaluation relies on objective criteria, we hold that [the employee] has satisfied his burden to demonstrate pretext ... for the purposes of avoiding summary judgment." Garrett, 305 F.3d at 1218. Although this language is indeed broad, our holding in Garrett was much more narrow. There, the plaintiff's rankings had taken an abrupt turn for the worse almost immediately after that plaintiff began organizing a pro-diversity committee at the work place. Moreover, the defendant did not contest, consistent with expert testimony on the subject, that the rankings were "wholly subjective." Id. at 1214, 1218. Indeed, elsewhere in Garrett we clarified that " [w]hen viewed in the aggregate, his proffered evidence is sufficient to raise a genuine doubt about Defendant's motivation." Id. at 1220 (emphasis added, quotation omitted).
Unlike in Garrett, here we do not consider Burlington's evaluation process "wholly subjective." The evaluations, while covering such subjective considerations as team building, personal leadership, and personal accountability, also required the employee's immediate supervisor to enumerate specific results achieved with supporting examples. Burlington also used a particular evaluation form that included multiple mandatory areas for evaluation, and Pippin's evaluations showed a consistent pattern of "soft skill" issues over more than ten years. Thus, neither the contents of, nor Burlington's reliance on, these evaluations support an inference that Burlington's proffered reasons for terminating Pippin were pretextual.
Pippin also asserts pretext by asserting that the evaluations and rankings "used by management for the announced purpose of determining bonus levels is known and understood by management to be the likely basis for layoffs or reductions in force." He claims that the "RIF must have been in the wind at the time of the 1999 ranking process" and that his 1999 evaluations were "manipulated in order to place him last because there was personal animosity between himself and one of the team supervisors." Finally, Pippin argues that the criticisms in his evaluations were "false, vague, and ... put in the evaluation so they could fire Pippin because of his age" and that instead he had "very substantial success" at Burlington.
However, we see no permissible inference of pretext from any of these self-serving claims. For example, Pippin complains that one of the upper-level managers had previously suggested that Pippin should be "managed out of the company."9 He asserts that this establishes "an ulterior motive other than the supposedly objective criteria which Defendant claimed to use" which Pippin asserts evidences "manufactured reasons for termination." To the contrary, this statement simply supports Burlington's assertion that Pippin had a longstanding performance problem prior to the 2000 RIF.
Similarly, Pippin's complaint that his 1999 evaluation was "manipulated" is without merit. He cites two versions of this evaluation in the record—the first is unsigned and the second is signed by Pippin, Pippin's immediate supervisor, and his supervisor's manager, and dated January 2000, well before the April 2000 RIF. Pippin notes that the second copy includes additional negative comments that do not appear on the first, unsigned version.10 Although this language may well have been added, Pippin's final scores in the 360 degree feedback portion of the evaluation are the same on both versions and, on both, Pippin received an overall rating of "Met Expectations +". Furthermore, similar, albeit more generic comments, are on both versions under Pippin's "Development Needs." Finally, multiple supervisors' opinions are imbedded in the ranking process itself and, as this evaluation is in substance consistent with Pippin's earlier evaluations, we see no reason to suspect pretextual manipulation of the evaluations.
Finally, although Pippin certainly thinks he was well qualified and a good performer, " [i]t is the perception of the decision maker which is relevant, not plaintiff's perception of [him]self." Branson v. Price River Coal Co., 853 F.2d 768, 772 (10th Cir. 1988). Indeed, an employer "may chose to conduct its RIF according to its preferred criteria of performance ... and we will not disturb that exercise of defendant's business judgment." Beaird, 145 F.3d at 1169; see also Lucas v. Dover Corp., Norris Div., 857 F.2d 1397, 1403-04 (10th Cir. 1988) ("This court will not second guess business decisions made by employers, in the absence of some evidence of impermissible motives."); Simms, 165 F.3d at 1330 (noting it is not court's role to establish defendant's hiring criteria or act as super personnel department).11 Pippin may have produced technical results, but Burlington's decision to terminate Pippin due to his poor soft skills does not warrant an inference of pretext.
Finally, Pippin argues a jury could infer pretext because Burlington has a "long history" of preventing Senior Engineers from retiring, and statistical evidence reveals a pattern of age discrimination.
Q. Have you ever seen a senior engineer retire at Burlington?
A. A senior engineer retire?
Q. What happens to all these engineers? It seems like the place is filled with them, and none of them retire. Why is that?
A. I think for the most part, they're probably not of retirement age.
Q. At least, not the ones that continue to be employed here, right?
A. I can't think of one who is 55 years or older, as we speak.
Q. Can you think of any who have gotten terminated besides Mr. Pippin who are approaching that age?
However, absent information about what happened to the other senior engineers— whether they were promoted to other positions or terminated to avoid retirement— this weak evidence does not support an inference that Defendant's stated reasons for termination were pretextual.
Similarly, Pippin's allegation of a statistical pattern of age discrimination— apparently inferred from the fact that fourteen of the nineteen employees terminated in the 2000 RIF were over forty—is not supported by the record.12 "Statistical evidence which fails to properly take into account nondiscriminatory explanations does not permit an inference of pretext." Furr, 82 F.3d at 987. A "plaintiff's statistical evidence must focus on eliminating nondiscriminatory explanations for the disparate treatment by showing disparate treatment between comparable individuals." Rea, 29 F.3d at 1456 (quotation omitted). Statistical evidence that does not adjust "for the various performance evaluations and departmental rankings of the employees included in the statistical pool" does not compare "similarly situated" employees and therefore "fails to eliminate nondiscriminatory explanations for disparate treatment." Id.
In this case, Pippin's statistical evidence that fourteen out of nineteen RIF-terminated employees were over forty does not account for any of these different individuals' circumstances, skills, or prior performances. It represents only a very small sample size, cf. Mayor of Philadelphia v. Educational Equality League, 415 U.S. 605, 621, 94 S. Ct. 1323, 39 L. Ed. 2d 630 (1974) (noting concern with sample size of thirteen), and it fails to tell us what portion of the overall Burlington workforce was over forty in order to compare whether 14/19 is an excessive percentage of over-forty terminations. See Stone v. Autoliv ASP, Inc., 210 F.3d 1132, 1139 (10th Cir. 2000) (" [S]tatistics concerning employees terminated in a RIF are probative to the extent they suggest that [protected classes of employees] were not treated less favorably than [the privileged classes].").
Taking all of this together, we agree with the district court that Pippin has not presented sufficient evidence to support an inference of pretext. The RIF was implemented consistently, and Pippin has presented no evidence of a history of discrimination or a discriminatory intent in terminating Pipping. Accordingly, we affirm the district court.
Pippin's complaint did not originally assert a federal disparate impact theory. Nonetheless, Pippin did assert a federal disparate impact claim in a footnote to his summary judgment response brief. This footnote arose in the context of Pippin's assertion that the pattern of terminations of over-forty engineers combined with Burlington's decision to hire a group of new engineers under the age of forty showed that the RIF was pretextual. That footnote reads in its entirety: Not only is the explanation given contrary to reason, and thus probative of disparate treatment, this RIF had a disparate impact on those over 40. Plaintiff recognizes that the disparate impact argument has been rejected in the Tenth Circuit, Ellis v. United Airlines, Inc., 73 F.3d 999, 1006 (10th Cir. 1996), but points to the argument and authorities cited in the brief of Petitioner in Adams v. Florida Power Corporation, which justify presentation of this issue in this case. Though certiorari was granted in that case, it was fully briefed, and oral argument was held, [534 U.S. 1054], 122 S. Ct. 643, [151 L. Ed. 2d 561 (2001)] certiorari was dismissed as improvidently granted, [535 U.S. 228], 122 S. Ct. 1290, [___ L. Ed. 2d ____] (2002). Plaintiff here asserts that disparate impact claims are viable under [ADEA], and that he has presented evidence which establishes the viability of his claim under that theory.
Burlington never objected to the assertion of this new claim below, and on appeal Burlington acknowledges that we may consider the disparate impact theory because "Smith changed the law in this Circuit while the appeal was pending." Gray v. Phillips Petroleum Co., 971 F.2d 591, 592 n. 3 (10th Cir. 1992); Anixter v. Home-Stake Prod. Co., 77 F.3d 1215, 1222, 1231-32 (10th Cir. 1996). We agree, and will consider the claim.
Pippin asks that we "reverse and remand for consideration of the applicability of that claim in this case." However, it is not our usual practice to give litigants the proverbial second bite at the apple. Pippin claims here that he "asserted" the claim below, and he stated before the district court that he "presented evidence which establishes the viability of his claim under that theory." Even on appeal Pippin concedes that "the factual predicate was laid" for his disparate impact claim and he asserts no specific additional facts or evidence that he could submit on the RFOA defense that is not already in the record before us. Pippin's request for remand was not to present more evidence but merely to allow the district court to consider the applicability of the claim. However, as a matter of law, our review of the district court's grant of summary judgment is de novo and, just as the Supreme Court did for the litigants in Smith, we are fully capable of reviewing the substance of Pippin's assertions as they now stand.
"A claim of disparate impact, unlike a claim of disparate treatment, does not require a finding of intentional discrimination." Ortega v. Safeway Stores, Inc., 943 F.2d 1230, 1242 (10th Cir. 1991). To the contrary, the entire "necessary premise of the disparate impact approach is that some employment practices, adopted without a deliberately discriminatory motive, may in operation be functionally equivalent to intentional discrimination." Id. (internal quotations and citations omitted); accord Faulkner v. Super Valu Stores, Inc., 3 F.3d 1419, 1428 (10th Cir. 1993).
Although the Supreme Court in Smith recognized that "the ADEA does authorize recovery in `disparate-impact' cases," the Court clarified that the "scope of disparate-impact liability under ADEA is narrower than under Title VII." 125 S. Ct. at 1540, 1544. Indeed, the Court held that while the Civil Rights Act of 1991 expanded an employer's exposure to liability on a disparate impact theory in Title VII, these 1991 amendments did not affect ADEA or "speak to the subject of age discrimination." Id. at 1545. Therefore, the Court's narrower pre-1991 interpretation of disparate impact liability, as articulated in Wards Cove Packing Co. v. Atonio, 490 U.S. 642, 109 S. Ct. 2115, 104 L. Ed. 2d 733 (1989), "remains applicable to the ADEA." Smith, 125 S. Ct. at 1545.
This Wards Cove framework requires that " [t]o establish a prima facie case of disparate impact discrimination, plaintiffs must show that a specific identifiable employment practice or policy caused a significant disparate impact on a protected group." Ortega, 943 F.2d at 1242; see also Wards Cove, 490 U.S. at 655-56, 109 S. Ct. 2115. Thus, an employee must point to both a significant disparate impact and to a particular policy or practice that caused the disparity.
Moreover, "it is not enough to simply allege that there is a disparate impact on workers, or point to a generalized policy that leads to such an impact. Rather, the employee is `responsible for isolating and identifying the specific employment practices that are allegedly responsible for any observed statistical disparities.'" Smith, 125 S. Ct. at 1545 (quoting Wards Cove, 490 U.S. at 656, 109 S. Ct. 2115) (emphasis original).
In the pre-1991 disparate impact claims under Title VII, once a plaintiff successfully asserted a prima facie case of disparate impact discrimination, the burden of production shifted to the employer to produce evidence of "business necessity" for the challenged practice. Ortega, 943 F.2d at 1243 (quotation omitted). Once such evidence was produced, the plaintiff had the ultimate burden of persuading the factfinder that "other tests or selection devices, without a similarly undesirable discriminatory effect, would also serve the employer's legitimate [business] interests" and be "equally effective" in achieving those goals. Id. at 1244 (quotations omitted).
"It shall not be unlawful for an employer, employment agency, or labor organization to take any action otherwise prohibited ... where age is a bona fide occupational qualification reasonably necessary to the normal operation of the particular business, or where the differentiation is based on reasonable factors other than age."
29 U.S.C. § 623(f) (1) (emphasis added).
Thus, after an employee establishes a prima facie case of disparate impact age discrimination under the ADEA, the burden of production shifts to the employer to assert that its neutral policy is based on a reasonable factor other than age. Indeed, " [u]nlike the business necessity test [under Title VII], which asks whether there are other ways for the employer to achieve its goals that do not result in a disparate impact on a protected class, the reasonableness inquiry includes no such requirement." Smith, 125 S. Ct. at 1546. Instead, to prevail on an ADEA disparate impact claim, an employee must ultimately persuade the factfinder that the employer's asserted basis for the neutral policy is unreasonable. See id. The test is not whether there were other more narrowly tailored ways for the employer to achieve its legitimate business goals. See Embrico v. U.S. Steel Corp., 404 F. Supp. 2d 802, 830 (E.D. Pa. 2005) (in dicta; applying Smith). Instead, the employee must show that the method selected was unreasonable.
[T]he City's decision to give raises based on seniority and position. Reliance on seniority and rank is unquestionably reasonable given the City's goal of raising employees' salaries to match those in surrounding communities. In sum, we hold that the City's decision to grant a larger raise to lower echelon employees for the purpose of bringing salaries in line with that of surrounding police forces was a decision based on a `reasonable factor other than age' that responded to the City's legitimate goal of retaining police officers.
In this case, Pippin has failed to establish evidence supporting a prima facie case of disparate impact. Pippin notes that the RIF itself, or how the RIF was applied, resulted in the termination of more over-forty workers than under-forty employees. However, absent any evidence of the "comparables"—i.e., the age of Burlington's other employees or even the age of the other employees in the San Juan Division—this statistic has little significance. See Sloat v. Rapid City Area Sch. Dist. No. 51-4, 393 F. Supp. 2d 922, 935 (D.S.D. 2005) (granting employer summary judgment where employee had failed to allege prima facie claim of disparate treatment under the ADEA because he failed to allege any statistics showing a disparate impact).
But, even if Pippin established a prima facie case, Burlington was entitled to summary judgment pursuant to the RFOA defense. Pippin claims the specific policy that led to a disparate impact on those employees over the age of forty was a policy of determining which employees to let go during the RIF based on prior job performance and skill set. Pippin couples that policy with Burlington's policy of honoring its prior commitment to hire several new employees fresh out of school to assert that Burlington's policies were not reasonable.
However, as a matter of law, these were not unreasonable policies. Certainly, relying on prior performance ratings and the determination of which employees have the skills most useful to the company going forward are reasonable criteria for any company to use in deciding which employees to keep and which to let go in a RIF. See Embrico, 404 F. Supp. 2d at 829 (in dicta, noting that employer's reliance on employee's technical background to select employees for retention was reasonable).
Further, a decision by Burlington to honor its prior commitment to new hires in order to protect its hiring reputation at the schools involved is reasonable, as is the decision to keep new hires who have not yet been evaluated.
All of these decisions were based on reasonable factors other than age. Corporate restructuring, performance-based evaluations, retention decisions based on needed skills, and recruiting concerns are all reasonable business considerations. Pippin has not presented any evidence sufficient to withstand summary judgment to the contrary. Indeed, Pippin has cast no doubt on the reasonableness of these concerns at all. See Embrico, 404 F. Supp. 2d at 830 (noting, in dicta, that employer would be entitled to summary judgment because employee was unable to contradict employer's evidence that its policy of relying on employees' technical background to determine which employees to retain was reasonable). Accordingly, we affirm the district court. Pippin has not set forth a valid disparate impact claim.
We AFFIRM the district court's grant of summary judgment in Burlington's favor.
According to Burlington's Human Resources Manager, "Mr. McCracken has a specialized skill set in advanced reservoir engineering stimulation, which Mr. Pippin does not possess. Mr. McCracken has specialized expertise and experience in reservoir modeling and other techniques to optimize production through advanced stimulation techniques."
The new exhibits Pippin is particularly concerned about include a second affidavit from the San Juan Division's Human Resources Manager, additional excerpts of several depositions, and a copy of Ralph Nelms's 1999 evaluation.
[the] Court's reliance upon facts contained in the Reply, if such occurred at all, was de minimis. The Court has reviewed its Order on summary judgment and finds, even excluding the complained-of portions of the decision, ample justification for the Court's conclusion that there are no genuine issues of material fact that entitle Plaintiff to proceed with his case.
As such, any error would have been harmless. See Beaird, 145 F.3d at 1165.
Indeed, Burlington officials testified that "there was no pre-determined specified percentage of positions to be eliminated across the company and that reduction in staff would be made by the local site management."
Q. Do you remember any comment anyone made about what should happen with Mr. Pippin?
A. I can remember—and here again, I don't know what time cycle this was. I can remember the comment being made, should he be managed out of the organization.
Q. Do you remember who made that comment?
Q. Was it a question he was asking or a recommendation he was making?
A. I really didn't know what—I had never heard it before, or I'm not sure what it meant, or no, sir.
Q. Was there a follow-up discussion about it?
A. Not that I was in attendance.
This provides very thin support for Pippin's claim.
Resisted supporting MV Best Practices study with PUD team and Drilling. Consistently showed lack of support for team effort and results.
Consistently fails to understand the damage done to integrity of Division leadership by constantly telling less experienced junior staff of `We v. Us' situations. Mike's regular negative comments about direction of the management staff and activities of the Drilling group severely damage his credibility with Division leadership.
Also, Burlington has presented evidence that these other engineers were not similarly situated because they either had unique skills Pippin did not possess or they had better performance histories than Pippin. Further, given there are legitimate reasons for this different treatment of individuals, Pippin has not shown that Burlington actually considered whether a poor-performing engineer was junior or senior in making its RIF elimination decisions.


text:
While it was not dispositive of the case, the Board in Smith v. Dept. of the Interior, DC-0752-09-0135-I-1, 2009 MSPB LEXIS 2080 (April 17, 2009) applied the wrong FMLA standard on eligibility. In so doing, the Board also cited to two different variants of the FMLA as if they were interchangeable.
Citing 29 USC 2611(2)(A)(ii), the Board incorrectly stated that, to be eligible for FMLA leave, an employee must have been employed with a covered employer for at least 12 months and worked at least 1250 hours of service proceeding the use of FMLA leave. The Board cited part of the Title I eligibility standard. The Board did not explain, nor is it otherwise apparent from the facts, why the Title I eligibility standard would apply to Ms. Smith, A GS-7 Secretary with the U.S. Geological Survey. Under Title II, the 12-month of employment (as a Title II employee) eligibility standard is incorporated into the definition of "employee." 5 USC 6381(1)(b). Title II does not require 1250 hours of service prior to leave commencement in order for a Title II federal employee to be eligible for FMLA leave.
Inexplicably, after incorrectly citing the Title I eligibility standard, without skipping a beat the Board goes on to correctly cite Title II standards by reference to various sections of Title 5 and 5 CFR Part 630. Apparently, the Board is of the mistaken belief that the statutory and regulatory requirements of Title I and Title II are interchangeable. The MSPB need look no further than the eligibility requirements to confirm that the statutory and regulatory requirements of the FMLA are not identical and, therefore, are not interchangeable.
After 16 years, the MSPB needs to accept that Titles I and II of the FMLA apply to different segments of the federal workforce. Moreover, they are not identical. If they were Congress would have had no need to create two entirely different statutes and direct two different federal agencies, the DOL and the OPM, to create two separate sets of FMLA implementing regulations.
The fact that Title II FMLA requirements do not apply to Title I employees is manifest in the OPM regulations. The OPM regulations specifically exclude from the definition of a Title II covered "employee" any employee covered by Title I of the FMLA. See 5 CFR 825.1201(b)(2)(iv). Similarly, the DOL regulations exclude employees covered by Title II from coverage by Title I of the FMLA. 29 CFR 825.109(c). It should go without saying that the Board should only apply the correct version of the FMLA to the facts at issue.
Comment: Attorneys and others with appeals containing FMLA claims before the MSPB will need to school the judges on which version of the FMLA applies to the facts at issue so that your client's FMLA rights are protected from errant decisions based on FMLA standards that don't apply to your case. The MSPB badly needs some remedial FMLA training.
When it comes to the FMLA rights of federal sector employees the MSPB simply doesn't get it.
In Hines v. USPS, No. DE-0752-08-0033-I-2, 2008 MSPB LEXIS 5066, at * 5 (Oct. 29, 2008), the employee appealed his removal for absenteeism by alleging that his absences should have been covered by the FMLA as he requested. In discussing the employee's FMLA rights, the Board referenced the statutory provisions of Title II of the FMLA (5 USC 6381, 6382). Postal employees are covered by Title I of the FMLA. See 29 CFR 825.109(b)(1). Postal employees have never been covered by Title II of the FMLA. Thankfully, notwithstanding the Board's reliance on the wrong FMLA statute, it appears that they achieved the correct result. The Board found that the FMLA did not protect the absences that formed the basis of the removal because they exceeded the scope of the medical certification provided.
Comment: The FMLA has been in existence for over 15 years. During that time the Postal Service has always been covered by Title I of the FMLA. Title I is codified at 29 USC 2601, et. seq. DOL regulations implementing Title I are codified at 29 CFR Part 825. The FMLA rights of civil service employees set forth in Title 5 and in OPM regulations at 5 CFR Part 630 do not apply to Postal employees. When it comes to the FMLA rights of Postal employees, citation to Title 5 and 5 CFR Part 630 is always incorrect.
Moreover, as I discussed in my post of April 28, 2008, there are four different variants of the FMLA that apply to different segments of the federal workforce. Critically, the FMLA rights of federal employees are not always the same. As such, it is not safe to assume that it doesn't really matter whether the OPM or DOL FMLA regulations are cited because, in the end, they substantively provide the same rights. They do not. If anything, the DOL's recent revision of their FMLA regulations has, in many instances, increased the differences with OPM's FMLA regulations.
Recent decisions demonstrate that the Merit Systems Protections Board is confused regarding the FMLA rights of federal sector employees. The Board has repeatedly and incorrectly applied the wrong variant of the FMLA. It has also erroneously cited to the OPM and DOL FMLA regulations interchangeably as if those regulations both applied to all situations. That is simply not the case.
There are four federal sector variants of the FMLA that apply to different segments of the federal workforce. While identical in some areas, the variants are materially different in others. As such, the federal sector FMLA variants are not interchangeable. Application of the requirements of one variant of the FMLA may violate the FMLA rights of an employee covered by another FMLA variant. To avoid FMLA errors, the Board needs to apply the correct FMLA standard.
In Kimbrough v. Dept. of Defense, No. DC-0752-06-0287-I-1, 2006 MSPB LEXIS 4379 (Aug. 1, 2006) the Board sustained the agency’s removal of the Kimbrough for AWOL and failure to follow established leave procedures. In so holding, the Board found that the Defense Contract Management Agency (DCMA) properly denied Kimbrough’s request for FMLA leave due to insufficient medical documentation. Kimbrough requested FMLA leave after sustaining a knee and back injury which apparently required surgery. In response to the DCMA’s request, he provided a medical Certificate of Health Care Provider signed by his family practice physician. DCMA found the medical certification insufficient, notified Kimbrough of the deficiencies and requested additional medical information. Kimbrough refused to provide the additional information. He was subsequently removed.
The Board initially noted that DCMA had the right to require Kimbrough to support his request for FMLA leave due to his own injury with medical certification. Pursuant to 5 USC 6381, such certification must include the probable duration of the condition, the appropriate medical facts within the knowledge of the health care provider regarding the condition, a statement that the employee is unable to perform the functions of the position, and information on the duration and frequency of any intermittent absences. The Board found that the certification provided by Kimbrough did not satisfy these minimum requirements. The Board found that the statement of “medical facts” was insufficient because it generically described fairly common conditions, and did not describe how those conditions prevented Kimbrough from performing his duties. A statement that the probable duration would “be determined after consultation with an orthopedic surgeon” was found insufficient. The Board similarly found deficient the certifications representation that the probably number and frequency of intermittent absences would be determined after consultation with an orthopedic surgeon.
The Board concluded that, because of such deficiencies, the DCMA reasonably requested Kimbrough to provide additional information regarding his medical condition, along with his rights and responsibilities. When he refused to provide additional information, the Board found that DCMA properly cited Kimbrough as AWOL and failure to follow leave procedures.
Comment: The decision may have inadvertently applied the wrong FMLA variant, although the result would not change. The Board determined the adequacy of the medical certification by reference to the requirements of Title II of the FMLA. Kimbrough, the Board noted, was in the “federal civilian service” of the military. Title I of the FMLA applies to civilians in the military departments, not Title II. 29 CFR 825.800 (definition of employee). Title II applies to civil service employees. Title II, like Title I, however, requires the same medical certification information at issue (e.g., medical facts, probable duration, frequency and duration of need for intermittent leave). Moreover, the Board in Kimbrough further found that, even if he should have been granted FMLA leave, it would have sustained the removal anyway based on the 3 months of AWOL not covered by the FMLA.
Simply put, the Board cannot allow an employee to bypass this scheme by ignoring the agency’s request for medical evidence under 5 U.S.C. 6383 and then attempting to present evidence to support the leave request for the first time in a Board appeal.
The Board went on to find that, if an employee is not on notice that she is required to submit evidence to the agency to support an FMLA leave request, it may be appropriate for the Board to consider evidence submitted for the first time on appeal. Similarly, if the employee made some effort to support her request for LWOP with documentation and the agency found her documentation to be inadequate but did not provide guidance regarding what precisely it would deem adequate documentation, such lack of guidance could provide a basis for considering the employee’s evidence that was submitted for the first time on appeal. The Board found that none of these exceptions applied because the agency had properly and repeatedly notified the employee of the requirement to submit medical certification to substantiate her need for FMLA leave. As such the Board rejected the employee’s evidence of her own health condition and that of her parents that was submitted for the first time on appeal. Absent such evidence, the Board sustained the AWOL charge.
Comment: The decision points out the minimalist agency notice requirements of the OPM implementing regulations. Title II does not specifically require an agency to notify an employee that the employee will be required to timely submit medical certification confirming the need for FMLA leave. Rather, the OPM regulations broadly require agencies to inform its employees of their entitlements and obligations by providing access to Title II of the FMLA and the OPM implementing regulations. It is not clear that such access would meet the Board’s notice standard to preclude new evidence of incapacitation from being introduced for the first time on appeal. Note that the Board in Dias approved of the agency’s notice by written letter directly to the employee. It also favorably approved of notice through the employee’s union representative, although it is unclear whether this notice was oral or in writing. Similarly, OPM’s FMLA regulations do not require agencies to notify employees when the certification is incomplete. Agencies wishing to avoid the consideration of new evidence of incapacitation at a Board hearing must timely notify the employees of any certification deficiencies and provide them with a reasonable opportunity to cure those problems. The Board appears to be imposing agency medical certification notice requirements that are very similar to those that apply under Title I of the FMLA.
An agency has the burden of proving that it properly denied Family and Medical leave Act leave in charging an employee with unauthorized absence. Johnson v. Dept. of the Interior, 2006 MSPB LEXIS 4372 (Aug. 21, 2006).
In Hess v. U.S. Postal Service, 2006 U.S. MSPB LEXIS 4188 (July 28, 2006), the employee filed an appeal with the Board because he was charged with being AWOL for approximately one-month. The Board noted that it normally has no jurisdiction to review an agency’s decision to place an employee in AWOL status. To assert jurisdiction over such an action, the Board must find that the placement on AWOL status constitutes a constructive suspension of more than 14 days. Whether the employee or the agency initiated the absence in question is determinative of an appealable constructive suspension. If the agency bars the employee form duty for more than 14 days the Board will find a constructive suspension. If the employee voluntarily absents himself from work, the agency’s decision to place him in AWOL status is not a constructive suspension. The Board found that Hess initiated the four-week AWOL absence at issue as evidenced by his request for FMLA leave for that period. Because his absence was not at the behest, or under the control, of the agency, the Board lacked jurisdiction over the appeal.
An employee is not required to explicitly invoke the FMLA, in requesting leave; it is sufficient that the employee make the agency aware of circumstances that would warrant leave under the FMLA. Covington v. Department of the Army, 85 MSPR 612, 620 (2000).
The Covington decision cites the decision of the Board in Ellshoff v. Dept. of the Interior, 76 MSPR 54, 76 (1997). In that case the Board applied the Title I standard of employee notice set forth in Manuel v. Westlake Polymers Corp., 63 F.3d 758, 762 (5th Cir. 1995). The Board found that, in terms of the adequacy of employee notice, the notice provisions of Title II, 5 USC 6382(e) and Title I, 29 USC 2612, were materially identical.
Comment: The MSPB has clearly indicated that employees covered by Title II need not specifically invoke the FMLA by name as part of the duty to request leave. The Board will determine the adequacy of employee notice of the need for FMLA leave based on the standards developed under Title I of the FMLA. Federal agencies, therefore, need to keep current on Title I developments regarding the adequacy of employee notice of the need for FMLA leave. A counter argument could be made that the final OPM regulations implementing the FMLA require that an employee specifically invoke their right to FMLA leave. See Comments accompanying publication of the final OPM FMLA regulations, 5 CFR 630.1203(b). Employee notice requirements are addressed in Chapter 8 of A Federal Sector Guide to the Family and Medical Leave Act & Related Litigation (Dewey Publications, Inc., 2003 & 2005 Supplement).

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This matter is before the Court on the debtor's Motion for Partial Summary Judgment against defendant NCI Building Systems, L.P. ("NCI") filed herein on October 13, 1995, and NCI's Response and Motion for Partial Summary Judgment filed on October 20, 1995. This Court has jurisdiction of this matter pursuant to 28 U.S.C. §1334(b). The debtor has alleged that it is a core proceeding pursuant to 28 U.S.C. §157(b)(2). The debtor was the plaintiff in this matter until its Chapter 11 case converted to Chapter 7, and the trustee was substituted as the party in interest.
The debtor initiated this matter by the filing of its Complaint on December 13, 1994. In regard to NCI (originally designated "American Building Company") the Complaint sought the return of structural steel for the construction of a grandstand at the racecourse the debtor proposed to build. On March 9, 1995, the debtor moved to file an Amended Complaint, and on March 15, 1995, moved to dismiss American Building Company. An order sustaining these motions and adding NCI, inter alia, as a party was entered on April 18, 1995.
The Amended Complaint was filed on April 19, 1995, and NCI filed its Answer to the Amended Complaint on May 11, 1995. The debtor filed a Second Amended Complaint on July 18, 1995. NCI filed a Motion to Dismiss Case on October 4, 1995. The debtor filed its Motion for Partial Summary Judgment, and NCI filed its Response and Motion, as set out above. The debtor voluntarily converted its Chapter 11 case to Chapter 7 on November 17, 1995. By Order of this Court entered on November 17, 1995, the Motions for Summary Judgment were abated pending the appointment of a Chapter 7 trustee and the realignment of the trustee as party plaintiff.
This Court entered an Order on December 18, 1995, giving the trustee sixty days to move the Court to be realigned as the party plaintiff herein. The trustee filed her Motion for Substitution as Party Plaintiff on January 26, 1996, and an Order in that regard was entered on February 9, 1996. The trustee advised the Court that she had nothing further to add to the debtor's Motion for Partial Summary Judgment, and an Order was entered on September 11, 1996, submitting the matter for decision.
In its Motion for Partial Summary Judgment the debtor contends that NCI should return $357,000.00 which the debtor paid for structural steel intended for the construction of a grandstand. This sum represented half of the total amount due for the steel under a contract ("the steel contract") between defendant Philip D. Jarvis d/b/a Jarvis Construction ("Jarvis") and NCI. According to the debtor, after this payment was made Jarvis informed NCI that no further payments would be made and that NCI should pick up the partial shipment of steel it had delivered. The debtor states that when it learned of the repossession it demanded the return of the $357,000.00.
(b) recover damages for nondelivery as provided in this article (KRS 355.2-713).
The debtor further contends that NCI's repossession of the steel is a voidable preference pursuant to 11 U.S.C. §547(b) in that it was based on an antecedent debt and occurred within ninety days immediately preceding the involuntary petition filed against the debtor on October 24, 1994.
NCI's response to the debtor's first contention is that the debtor consistently sought the return of the steel, rather than its price, and that it should not be allowed to "change horses in mid-stream" without any further amendment to its pleadings. NCI also argues that the debtor and NCI were not in privity of contract with each other and therefore could not have the seller-buyer relationship contemplated by KRS 355.2-711. As to the debtor's second contention, NCI replies that it is not and was not a creditor of the debtor, and that 11 U.S.C. §547(b) is therefore inapplicable in this instance.
Federal Rule of Civil Procedure 54(c), made applicable herein by Federal Rule of Bankruptcy Procedure 7054(a), provides in pertinent part that "every final judgment shall grant the relief to which the party in whose favor it is rendered is entitled, even if the party has not demanded such relief in the party's pleadings." NCI argues that an exception to this provision exists when failure to demand the relief substantially prejudices the opposing party. It cites several cases in support of this position.
In our review, we found a technical assertion of a counterclaim for recovery notably absent from Meyertech's pleadings. We conclude, however, that Fed.R.Civ.P. 15(b), adopted by Bankr.Rule 7015, remedies this and, in conjunction with the application of Fed.R.Civ.P. 54(c) ... , supports the entry of the judgment in favor of Meyertech.
In determining the applicability of this provision here we examine the contents of the pleadings actually filed and the record of the proceeding below for reference to the [issue].
At page 421. It appears to this Court that the amount paid for the steel at issue herein, as well as the source of the payment, would necessarily be considered in determining whether the debtor had a right to the return of the steel. Therefore, the technical lack of a specific reference to the payment in a pleading would not defeat the debtor's recovery of that payment according to the reasoning in Meyertech, supra.
As concerns the issue of whether the debtor has a claim directly against NCI for either the steel or the payment of the $357,000.00, the debtor argues that it paid $357.000.00 for the partial shipment of steel, and now it has neither the steel nor the money. It contends that since it now has no use for the steel, it should have the money back. NCI argues that since the debtor was not a party to its contract with Jarvis, the debtor has no contract-based claim against NCI. Neither the debtor nor NCI support its contentions with reference to case law.
'It is settled in this State, as well as most jurisdictions in America, that a third party for whose benefit a contract is made may maintain an action thereon; however, he must have been a party to the consideration or the contract must have been made for his benefit, and the mere fact that he will be incidentally benefited by the performance of the contract is not sufficient to entitle him to enforce it.' 148 S.W.2d @ 274; 160 S.W.2d @ 673.
At page 307. The Simpson court goes on to conclude: "In short, all that is necessary is that there be consideration for the agreement flowing to the promisor and that the promisee intends to extract a promise directly benefiting the third party." Id., at page 307.
In the within matter, the consideration for the agreement, the money that was paid for the steel that was delivered, flowed to the promisor, NCI, for providing the steel to build the racetrack grandstand, a direct benefit to the debtor. In addition, the steel contract, a copy of which was filed herein as an exhibit to Jarvis's Answer, identifies the "End User" of the steel as the debtor's racetrack. It therefore appears to the Court that the debtor fits the definition of a third-party beneficiary, and that it may maintain an action on the contract between NCI and Jarvis.
The debtor has not established, however, that it could recover as the "buyer" under KRS 355.2-711. KRS 355.2-103 defines "buyer" as "a person who buys or contracts to buy goods." The steel contract specifically identifies Jarvis as the "buyer," the party who contracted to buy the steel in this instance. This Court believes that the provisions of KRS 355.2-711 apply to him and not to the debtor.
NCI further argues concerning the equities of its being allowed to retain both the steel it picked up and the money that was paid for it. In support of its contention that it should be able to retain both, NCI has filed the Supplemental Affidavit of Robert J. Medlock, vice-president and CFO of NCI. Mr. Medlock states that "NCI subcontracted out a substantial portion of the steel fabrication, requiring NCI to expend substantial monies therefor." He further states that "[d]ue to the highly specialized nature of the fabricated steel, its value as scrap is minimal in relation to the Steel Contract price."
NCI maintains that it would be inequitable to require either the return of the steel or the payment of any money to the debtor. NCI has expended "effort, money and manpower," it argues, and "the fabricated steel [is] worth no more than scrap value." Unfortunately, NCI does not provide the Court with any specific figures concerning either its expenditures or the scrap value of the steel. The Court therefore is unable to determine how much of the purchase price, if any, might reasonably be retained by NCI.
At page 2263. (In a footnote to this text, the court points out that the 1984 amendments to §547(b) substituted "an interest of the debtor in property" for "property of the debtor.") Consistent with this reasoning, the debtor herein had an "interest" in the property in question.
However, in order to establish a preference the debtor (now the trustee) must show that each element of §547(b) is satisfied. These include that the transfer was made to or for the benefit of a creditor, for or on account of an antecedent debt owed by the debtor before the transfer was made, while the debtor was insolvent, and within the appropriate preference period. The section also requires that the transfer enable the creditor to receive more than it would have in a Chapter 7 case in which the transfer had not been made and the creditor received payment of the debt to the extent provided in such a case.
The only preferential transfer element that the debtor even alleged in its Motion for Partial Summary Judgment is that the transfer took place within ninety days of the filing of the involuntary petition in October 1994. It neither alleges nor argues the other elements. NCI raises the issue of whether or not it is a creditor of the debtor. It states that it is not listed as a creditor on any of the debtor's schedules, and that it would have had no cause of action against the debtor if the money for the steel had not been paid. Therefore, while it seems clear that the debtor had a property interest in the steel, it is not so clear that the debtor and NCI had a debtor-creditor relationship with each other so as to satisfy the requirements of §547(b).
Based on all of the foregoing, it is the opinion of this Court that neither movant has carried forward its burden of establishing that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Both the plaintiff's Motion for Partial Summary Judgment and NCI's Motion for Summary Judgment should therefore be overruled, and an order to that effect will be entered separately.