                                                                                                                           Opinions of the United
2007 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


12-10-2007

Scully v. Alghny Ludlum Corp
Precedential or Non-Precedential: Non-Precedential

Docket No. 06-2252




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                                               NOT PRECEDENTIAL

      UNITED STATES COURT OF APPEALS
           FOR THE THIRD CIRCUIT
                ____________

                     No. 06-2252
                    ____________

               J. PATRICK SCULLY,

                            Appellant

                           v.

    ALLEGHENY LUDLUM CORPORATION;
 ALLEGHENY TECHNOLOGIES INCORPORATED;
     JOHN SCARFUTTI; DAVID MURPHY
              ____________

    On Appeal from the United States District Court
       for the Western District of Pennsylvania
                (D.C. No. 03-cv-01852)
        District Judge: Honorable Joy F. Conti
                    ____________

      Submitted Under Third Circuit LAR 34.1(a)
                   May 15, 2007

Before: FISHER, NYGAARD and ROTH, Circuit Judges.

             (Filed: December 10, 2007)
                    ____________

             OPINION OF THE COURT
                  ____________
FISHER, Circuit Judge.

       J. Patrick Scully sued his former employer, Allegheny Ludlum Corporation,1 and

two former supervisors. He alleged that in terminating him, they violated the Age

Discrimination in Employment Act (ADEA), the Pennsylvania Human Relations Act

(PHRA), and the Employee Retirement Income Security Act (ERISA). The District

Court granted summary judgment in favor of Allegheny Ludlum. We will affirm.

                                              I.

       We write exclusively for the parties, who are familiar with the factual context and

legal history of this case. Therefore, we will set forth only those facts necessary to our

analysis.

       Scully worked at Allegheny Ludlum for more than twenty-eight years. Following

an economic downturn, Allegheny Ludlum decided to cut costs by reducing its work

force. Gary Phillips, Scully’s direct supervisor, suggested to John Scarfutti, Vice

President for Human Resources, that his department could move forward without Scully.

Scarfutti designated Scully for potential termination. He then directed Phillips to conduct




       1
       Allegheny Ludlum is a subsidiary of Allegheny Technologies, Inc. Allegheny
Technologies was dismissed from the suit with the filing of Scully’s second amended
complaint.

                                              2
a “peer analysis”2 to determine whether to terminate Scully or Gerald Moser. Phillips’s

analysis gave higher scores to Moser.

       The next day, Scully was informed that his position was being eliminated.

Scully’s supervisors presented him with a proposed release agreement under which the

company would provide Scully twenty-six weeks’ base pay, outplacement services, and a

“70/80 pension,” in exchange for a release of legal claims against the company. Scully

did not sign the release. At this time, Scully was already entitled to the 70/80 pension.

He was also fifty-three years old and less than two years from reaching eligibility for a

significantly more generous pension. Meanwhile, Allegheny Ludlum retained Moser,

who was thirty-seven.

       Scully brought this action against Allegheny Ludlum and two of its employees.

The defendants moved for summary judgment, and the District Court granted their motion

and dismissed all of Scully’s claims. Scully now appeals.

                                             II.

       We have jurisdiction under 28 U.S.C. § 1291. Our standard of review of an order

granting summary judgment is plenary. Carrasca v. Pomeroy, 313 F.3d 828, 832 (3d Cir.

2002). “We apply the same test employed by a district court under Federal Rule of Civil

Procedure 56(c).” Id. Thus, the District Court’s grant of summary judgment “was proper


       2
        A “peer analysis” is triggered when more than one employee holds a given
position and a supervisor must decide which employee will be terminated. The
supervisor rates employees’ performance in essential job functions (80% of score),
attendance (10%), and years of service (10%).

                                             3
only if it appears that there is no genuine issue as to any material fact and that the moving

party is entitled to a judgment as a matter of law.” Id. at 832-33 (internal quotation marks

and citation omitted). Scully, the non-moving party, is “entitled to every favorable

inference that can be drawn from the record.” Id.

                                             III.

       Analysis of Scully’s ADEA and PHRA claims is governed by McDonnell Douglas

Corp. v. Green, 411 U.S. 792 (1973). Under McDonnell Douglas, an employee must first

establish a prima facie claim of discrimination, after which the burden shifts to the

employer to articulate a legitimate, non-discriminatory reason for its adverse employment

decision. Id. at 802. If the employer articulates one or more such reasons, the aggrieved

employee must then proffer evidence that is sufficient to allow a reasonable fact-finder to

find, by a preponderance of the evidence, that the employer’s reasons are false or

pretextual. Id. at 804-05.

       Allegheny Ludlum conceded that Scully established a prima facie claim of age

discrimination. However, it offered the following as legitimate, non-discriminatory

reasons for the employment decision: the company’s downsizing initiative, the peer

analysis process, Scully’s past performance problems, and his disciplinary record.

       The burden then shifted to Scully to cite some evidence, direct or circumstantial,

from which a fact-finder could reasonably either (1) disbelieve Allegheny Ludlum’s

articulated explanation, or (2) believe that an invidious discriminatory reason was more

likely than not a motivating or determinative cause of his termination. As Scully

                                              4
correctly argues, one of these is sufficient; the employee does not have to prove both that

the explanation is implausible and that discrimination was a motivating factor. Waldron

v. SL Indus., Inc., 56 F.3d 491, 494-95 (3d Cir. 1995).

       Scully cannot carry his burden by showing that Allegheny Ludlum’s decision was

“wrong or mistaken.” Fuentes v. Perskie, 32 F.3d 759, 765 (3d Cir. 1994). Rather, he

must demonstrate such “weaknesses, implausibilities, inconsistencies, incoherencies, or

contradictions in the employer’s proffered legitimate reasons for its action that a

reasonable factfinder could rationally find them unworthy of credence.” Id.

       Scully presented evidence that Scarfutti decided to terminate Scully well before

Phillips conducted a peer analysis, and that the peer analysis process was pro forma and

was manipulated to ensure that Scully would be terminated without leaving the company

vulnerable to litigation. In addition, Scully argues that the pension benefit calculations

that took place before the termination decision was final show that Allegheny Ludlum’s

proffered reasons were pretextual. The District Court rejected these arguments, reasoning

that even if they were true, they did not impugn Allegheny Ludlum’s legitimate non-

discriminatory reasons for the termination. We agree.

       Scarfutti’s involvement in the decision to terminate Scully does not indicate that

Scully’s age was a factor. Scarfutti knew Scully well, as he had been Scully’s direct

supervisor for several years, and it is only logical that his input was part of the

termination decision. Contrary to Scully’s assertions, the timeline of his termination is

not suspicious. Prior to the peer analysis, his name was put on a list of employees for

                                               5
possible termination. However, during the time period when management was discussing

and implementing the downsizing, all departments of Allegheny Ludlum created lists of

employees for potential termination. The presence of Scully’s name on this list is not an

indication of improper consideration of his age.

       The same reasoning holds true for the calculations of Scully’s pension benefits,

which took place more than a month before his termination. First, the record does not

show who asked for the calculations; it could have been Scully himself. Second, the

context of the calculations is important. Allegheny Ludlum was in economic distress and

was implementing significant company-wide downsizing. In this situation, calculations

of various employees’ pension benefits would be expected and do not undermine the

company’s proffered explanations for Scully’s termination.

       Scully argues that the peer analysis results were fabricated post hoc, and that the

process was fundamentally flawed. He is correct that peer analysis was discussed within

management as an effective tool for shielding Allegheny Ludlum from liability.

However, the record demonstrates that peer analysis also served a substantive managerial

function, and its defensive legal purpose does not support Scully’s claim that he was

terminated because of his age.

       We have reviewed the remainder of Scully’s arguments, and we conclude that he

has failed to carry his burden of showing that Allegheny Ludlum’s legitimate




                                             6
nondiscriminatory reasons for terminating him were pretextual.3 Therefore, the District

Court properly granted summary judgment for Allegheny Ludlum, and the individual

defendants cannot be liable under the PHRA for aiding and abetting discrimination.

                                            IV.

       Section 510 of ERISA “makes it unlawful to interfere with the attainment of rights

or benefits associated with an employee benefit plan.” DiFederico v. Rolm Co., 201 F.3d

200, 203 (3d Cir. 2000). Scully was terminated while he was eligible for a pension

benefit of approximately $850 per month. In less than two years, with the attainment of

thirty years’ seniority, he would have been eligible for a pension benefit of more than

$2,700 per month beginning at age 65.

       Scully must demonstrate that Allegheny Ludlum had the specific intent to violate

ERISA. DeWitt v. Penn-Del Directory Corp., 106 F.3d 514, 522 (3d Cir. 1997). We

have explained that:

       where the only evidence that an employer specifically intended to violate
       ERISA is the employee’s lost opportunity to accrue additional benefits, the
       employee has not put forth evidence sufficient to separate that intent from
       the myriad of other possible reasons for which an employer might have
       discharged him. This kind of deprivation occurs every time an ERISA
       employer discharges an employee and is not alone probative of an intent to


       3
         Allegheny Ludlum’s employee performance documentation gives credence to its
legitimate non-discriminatory reasons for Scully’s termination. More than a year prior to
his termination, Scully had exhibited inappropriate behavior, including slamming a
meeting room door with such force that the door knob broke. This behavior led to Scully
being placed on probation. In addition, Scully admitted during his deposition that during
the years he and Moser held the same position, Moser received higher performance
ratings.

                                             7
      interfere with pension rights. Accordingly, a prima facie case requires
      additional evidence suggesting that pension interference was a motivating
      factor.

Id. at 523. Scully has not produced evidence showing that Allegheny Ludlum terminated

him for the purpose of interfering with his pension rights. And even if he had done so,

thus making out a prima facie case, Allegheny Ludlum would be able to show legitimate

reasons for terminating him. We have analyzed the legal significance of the facts relating

to the ADEA claim, and the same analysis applies here, in the ERISA context.

                                            V.

      For the reasons set forth above, we will affirm the District Court’s grant of

summary judgment in favor of Allegheny Ludlum and the individual defendants.




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