Commercial Litigation and Arbitration

Spoliation Sanctions: Sixth Circuit Standards — Using Residential Funding Framework For Electronic Spoliation — Call to Ethics Hotline Absent Threat of Litigation or Preservation Demand Insufficient to Trigger Duty to Preserve

Goodale v. Elavon, Inc., 2023 U.S. App. LEXIS 32861 (6th Cir. Dec. 12, 2023) (unpublished)


Elizabeth Ann Goodale, proceeding through counsel, appeals the district court's judgment in favor of Elavon, Inc., on her employment-discrimination claims. The parties have waived oral argument, and the panel unanimously agrees that oral argument is not needed. See Fed. R. App. P. 34(a). For the reasons that follow, we affirm.

  1. Background

Elavon, a wholly owned subsidiary of U.S. Bank Corporation, is a credit card processing company. In 2004, Elavon hired Goodale as an account services representative. In October 2014, Goodale joined the Customer Account Manager ("CAM") team at the request of her manager, Greg fliers. As a CAM, Goodale managed "all aspects" of credit card business for customers with 1-to-15-million-dollar accounts. Elavon evaluated CAMs, in part, by reviewing their volume of [*2]  outbound calls about sales, equipment, and client retention. Hiers testified that an acceptable outbound call would be "[c]hecking on the health of the account, looking for sales opportunities," or as a "follow-up item from an e-mail." Goodale generally received good performance reviews as a CAM. But Goodale testified that, in early 2016, she made several complaints about internal issues, including receiving an annual review ranking that was lower than her trainee. In March 2016, Chris Dover joined the CAM team as director of small to medium business and became Hiers's manager. Later that year, three other CAMs whom fliers managed received promotions and six-percent raises. Goodale, at age 60, was promoted to public sector CAM and promised a six-percent raise, but she testified that she never received a raise. Goodale testified that, during a CAM team meeting in late 2016, several CAMs discussed what "[wa]s being put on [them] as seasoned people." In response, Dover said that he could "get rid of the older representatives and bring in younger, newer" employees. In January 2017, management increased the CAMs' monthly call goal from 500 to 700 calls and held a training class to discuss [*3]  "best practices," including a policy of not inflating call logs with unproductive outbound calls. Dover testified that, at the meeting, management informed CAMs that "erroneous or unproductive phone calls would not be tolerated, that the calls were monitored, recorded, [that management was] actively listening to the calls, and that they would be disciplined accordingly for making fraudulent phone calls."

In February 2017, Dover reviewed a recorded call that sounded automated and "suspicious." Upon initial review, he discovered that it was an American Express automated phone number and that two employees—Ronald Fleece and Lori Coile—had dialed the number repeatedly. Dover contacted human resources, which helped him research the use of the number and advised him on next steps. The investigation revealed that in 2017 four employees frequently dialed the number—Coile dialed it 136 times, Fleece dialed it 46 times, Charles Griffith dialed it 20 times, and Goodale dialed it 24 times. Elavon fired all four employees for misrepresenting calls. Specifically, Goodale's separation notice stated that she "misrepresented her outbound call efforts" by "repeatedly" calling a voicemail to "artificially [*4]  inflate" her calls. The notice stated that this practice was "not consistent" with the company's Code of Ethics, which directed employees to conduct "business fairly, responsibly, and ethically." Dover made the ultimate decision to terminate the employees. Goodale was 61 years old when Elavon terminated her employment. Goodale resisted termination, asserting that the phone number was a tool to convert American Express customers and that the calls were condoned by Hiers and Dover because she included the calls in her weekly reports to them. Goodale testified that at least two other employees told her that they also used the American Express number, but that Elavon did not terminate those employees. Goodale reported her termination to the company's ethics and compliance hotline, arguing that she called the American Express number for legitimate reasons, that Dover intimidated her by yelling and swearing at the team, and that "she was singled out" compared to other employees who also called the number. Her allegations against Dover for raising his voice at the team were substantiated, and Dover was ordered to receive direct training. Additionally, fliers admitted that he was aware that [*5]  his team used the American Express number, but he said that he was unaware of the "number of outbound calls being made." The ethics review did not determine there to be any ethics violations in the termination procedures.

In August 2017, Goodale filed an initial charge of discrimination with the Equal Employment Opportunity Commission (EEOC), alleging that she was unlawfully terminated because of her age and in retaliation for her internal complaints. After receiving her right to sue letter, she sued Elavon for violating the Age Discrimination in Employment Act (ADEA), 29 U.S.C. § 621, et seq. Specifically, she claimed that Elavon (1) paid younger employees more than her, (2) unlawfully terminated her for making authorized phone calls, and (3) terminated her in retaliation for her complaints about younger employees receiving better reviews.

Following extensive discovery, Elavon moved for summary judgment. Goodale opposed summary judgment and moved for spoliation sanctions. The district court granted Elavon's motion for summary judgment and denied Goodale's motion for sanctions.

In granting summary judgment in favor of Elavon, the court found that Goodale failed to make a prima facie case of age-based wage discrimination because she did not present any [*6]  evidence that she was paid less than similarly situated younger employees and that she failed to make a prima facie case of retaliation because she did not present any evidence that Dover was aware of her complaints. Lastly, the district court determined that, even if Goodale made a prima facie case for wrongful termination, Elavon presented a legitimate reason for termination and Goodale did not show that that reason was a pretext for age discrimination. In denying the sanctions motion, the court found that Elavon was not on notice to retain evidence past its 90-day retention policy until Goodale filed her charge with the EEOC. Goodale filed a timely appeal.

  1. Analysis

Goodale argues that the district court erred in granting summary judgment on her wrongful termination claim and in denying her motion for spoliation sanctions. She does not address her remaining claims in her brief and thus has forfeited them. See Watkins v. Healy, 986 F.3d 648, 667 (6th Cir. 2021).

  1. Summary Judgment

HN1[] We review de novo the district court's order granting summary judgment. See Smith v. City of Troy, 874 F.3d 938, 943 (6th Cir. 2017) (per curiam). Summary judgment is appropriate "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of [*7]  law." Fed. R. Civ. P. 56(a). A court reviewing a summary-judgment motion must draw all reasonable inferences in favor of the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986).

HN2[] The ADEA prohibits an employer from failing or refusing to hire, discharging, or discriminating "against any individual with respect to [her] compensation, terms, conditions, or privileges of employment, because of such individual's age." 29 U.S.C. § 623(a)(1). A plaintiff may prove an ADEA violation through direct or circumstantial evidence, see Geiger v. Tower Auto., 579 F.3d 614, 620 (6th Cir. 2009), but, either way, she bears the burden of proving that her age was a but-for cause of the employer's decision, see Gross v. FBL Fin. Servs., Inc., 557 U.S. 167, 176-77, 129 S. Ct. 2343, 174 L. Ed. 2d 119 (2009). "Under Gross, satisfying but-for cause requires plaintiffs to show that age 'had a determinative influence on the outcome' of the employer's decision-making process." Pelcha v. MW Bancorp, Inc., 988 F.3d 318, 324 (6th Cir. 2021) (quoting Gross, 557 U.S. at 176) (emphasis in original).

HN3[] In the absence of direct evidence of discrimination, ADEA claims are analyzed in accordance with the burden-shifting framework of McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S. Ct. 1817, 36 L. Ed. 2d 668 (1973). See Geiger, 579 F.3d at 622. Because Goodale did not present any direct evidence of discrimination, we apply the burden-shifting approach established in McDonnell Douglas to analyze her claim.

HN4[] The burden is on the plaintiff to establish a prima facie case of discrimination. McDonnell Douglas, 411 U.S. at 802. "To establish a prima facie case of age discrimination, a plaintiff [*8]  must show: '(1) membership in a protected group; (2) qualification for the job in question; (3) an adverse employment action; and (4) circumstances that support an inference of discrimination.'" Blizzard v. Marion Tech. Coll., 698 F.3d 275, 283 (6th Cir. 2012) (quoting Swierkiewicz v. Sorema N.A., 534 U.S. 506, 510, 122 S. Ct. 992, 152 L. Ed. 2d 1 (2002)). The district court determined that it was unclear whether Goodale made a prima facie case of discrimination. We assume, without deciding, that she has done so.

HN5[] If a plaintiff establishes a prima facie case of discrimination, the burden shifts to the defendant to articulate a legitimate, nondiscriminatory reason for the adverse employment action. McDonnell Douglas, 411 U.S. at 802. If the defendant satisfies its reciprocal burden, the burden then shifts back to the plaintiff to establish that the stated reason was pretextual. See Romans v. Mich. Dep't. of Hum. Servs., 668 F.3d 826, 838 (6th Cir. 2012).

Thus, we ask whether Elavon "articulate[d] a legitimate, non-discriminatory reason" for termination. Lefevers v. GAF Fiberglass Corp., 667 F.3d 721, 725 (6th Cir. 2012). To satisfy this burden, Elavon did not need to "persuade the court that it was actually motivated by the proffered reasons," Tex. Dep't of Cmty. Affs. v. Burdine, 450 U.S. 248, 254, 101 S. Ct. 1089, 67 L. Ed. 2d 207 (1981), but "the explanation provided must be legally sufficient to justify a judgment for the defendant." Id. Elavon met its burden by producing Goodale's official separation notice, which stated that she violated the Code of Ethics by "repeatedly" calling a voicemail [*9]  to "artificially inflate" her calls.

Accordingly, the burden shifted to Goodale to "prove by a preponderance of the evidence that the legitimate reasons offered by the defendant were not its true reasons, but were a pretext for discrimination." Levine v. DeJoy, 64 F.4th 789, 798 (6th Cir. 2023) (quoting Burdine, 450 U.S. at 253). HN6[] "A plaintiff will usually demonstrate pretext by showing that the employer's stated reason for the adverse employment action either (1) has no basis in fact, (2) was not the actual reason, or (3) is insufficient to explain the employer's action." Id. (quoting White v. Baxter Healthcare Corp., 533 F.3d 381, 393 (6th Cir. 2008)).

Elavon's proffered reason for termination has a "basis in fact," id., because the record establishes that Elavon was cracking down on improper outbound calls and that Goodale actually made the calls which Elavon considered improper. Management reviewed the topic at a training session the month before terminating Goodale and it began auditing calls to ensure compliance with the outbound call policy.

Goodale argues that she created a genuine dispute of material fact because she testified that (1) fliers and Dover approved of her use of the American Express number in her weekly reports, (2) her 24 calls to American Express did not necessarily comport "with the standard definition [*10]  of inflate," and (3) two younger employees admitted to also calling the American Express number but were not fired.

This evidence does not create a material factual dispute. First, the record establishes that fliers and Dover acknowledged the potential legitimate use of the American Express number. Dover acknowledged that "[a]n occasional call to [the American Express number] could be justified in the CAM role." But he determined that it was a severe "trust violation" to spend "entire days . . . calling nothing but this number." And despite being aware of the use of the American Express number and the legitimate business purposes for dialing it, Hiers stated that he was unaware of the "number of outbound calls being made." It was not until Dover heard a "suspicious" recording that anyone closely investigated the practice. Upon investigation, management determined that there was no legitimate reason to repeatedly dial the number.

Second, Goodale does not dispute the fact that she called the number multiple times in one day. Rather, she argues that it was insufficient to show that she was attempting to inflate her call log. But her argument misses the mark. HN7[] Ultimately, "an 'employer may [*11]  fire an employee for a good reason, a bad reason, a reason based on erroneous facts, or for no reason at all, as long as its action is not for a discriminatory reason.'" Pelcha, 988 F.3d at 329 (quoting Miles v. S. Cent. Hum. Res. Agency, Inc., 946 F.3d 883, 886 (6th Cir. 2020)). After Dover stated that CAMs were violating management's trust by spending entire days dialing the American Express number, the investigation revealed that Goodale called the number 24 times in one day. Because Elavon stated that it terminated Goodale based on her actual call history, the proffered reason is supported by a "basis in fact," and it is irrelevant whether Goodale was actually trying to inflate her numbers. Chattman v. Toho Tenax Am., Inc., 686 F.3d 339, 349 (6th Cir. 2012) (a proffered reason has a "basis in fact" if it actually happened).

To prove pretext, Goodale must show that her outgoing calls were not the actual reason for her termination or that making the calls was insufficient to support her termination, but she did not. Goodale testified that two other employees dialed the American Express number but were not terminated. But Goodale's testimony is insufficient to create an issue of fact. She did not testify as to when the other employees called the number or how often. Elavon's investigation specifically noted that, other than the four named employees, [*12]  "[n]o other CAMs" dialed the American Express number in 2017, let alone repeatedly in one day. Elavon terminated the employment of all four employees based on its 2017 investigation. Goodale failed to present evidence from which a reasonable juror could conclude that Elavon's stated reason for its action was pretextual. In sum, Elavon terminated Goodale after investigating all CAMs' use of the American Express number in 2017. Elavon also terminated three other employees at the same time and for the same reason. All four terminations occurred less than two months after Elavon increased the CAMs' monthly quota and explicitly warned them that their calls would be audited and that they should not inflate their call logs. Considering this evidence together, Goodale has failed to create a genuine dispute of material fact as to whether her age "'had a determinative influence on the outcome' of the employer's decision-making process." Pelcha, 988 F.3d at 324 (quoting Gross, 557 U.S. at 176).

  1. Spoliation

Goodale also appeals the district court's ruling denying her sanctions motion based upon Elavon's alleged spoliation of evidence. Goodale contends that Elavon improperly destroyed her weekly reports and the email correspondence regarding [*13]  the termination summaries. We review for an abuse of discretion a district court's decision regarding spoliation sanctions. See Beaven v. U.S. Dep't of Just., 622 F.3d 540, 553 (6th Cir. 2010). To support an inference of spoliation, Goodale must establish that (1) Elavon "had an obligation to preserve" the evidence when it was destroyed; (2) Elavon destroyed the evidence "with a culpable state of mind;" and (3) the evidence was "relevant . . . such that a reasonable trier of fact could find that it would support [a] claim or defense." Id. (quoting Residential Funding Corp. v. DeGeorge Fin. Corp., 306 F.3d 99, 107 (2d Cir. 2002)). An obligation to preserve evidence may arise "when a party should have known that the evidence may be relevant to future litigation." Beaven, 622 F.3d at 553 (quoting Kronisch v. United States, 150 F.3d 112, 126 (2d Cir. 1998)).

The district court concluded that Elavon's obligation to preserve evidence did not begin until Goodale filed her September 29, 2017, EEOC charge. Specifically, it determined that Goodale's call to the ethics hotline did not create an obligation to preserve evidence because it did not contain any mention of potential age discrimination or litigation. On appeal, Goodale argues that her call to the ethics hotline immediately after her termination gave Elavon notice that "litigation was a distinct possibility." She also argues that Elavon was aware of the possibility [*14]  of age discrimination litigation because of an internal document that noted that the terminations had "nothing to do with all four employees being over the age of 40 or tenure," and that the district court incorrectly determined that Elavon had a 90-day retention policy.

But the district court correctly determined that Goodale's ethics hotline call did not suggest that litigation was likely and trigger "an obligation to preserve" the records. Id. Instead, until Goodale filed a charge with the EEOC five months later, Elavon would not have known that its records were relevant to future litigation. Likewise, Goodale did not satisfy her burden of proving that Elavon had a duty to preserve the evidence at the time it was destroyed by pointing to evidence of an undated document noting that the terminations had "nothing to do with all four employees being over the age of 40 or tenure." In considering the district court's "broad discretion" to decide the matter, id. at 554, we cannot conclude that the district court abused its discretion in denying Goodale's request for sanctions.

For these reasons, we AFFIRM the district court's judgment.

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