Second Circuit Reaffirms: Documented Financial Restructuring and Outsourcing Can Defeat ADEA Pretext at Summary Judgment
Case: Tillman v. Grenadier Realty Corp., No. 24-2325-cv (2d Cir. Oct. 14, 2025) (summary order)
Court: U.S. Court of Appeals for the Second Circuit
Panel: Circuit Judges Wesley, Bianco, and Robinson
Disposition: Affirmed summary judgment for employer on ADEA claim; district court’s declination of supplemental jurisdiction over NYSHRL/NYCHRL claims affirmed.
Precedential Status: Summary order; non-precedential under FRAP 32.1 and Local Rule 32.1.1 (persuasive authority).
Introduction
This appeal arises from the termination of Barbara Tillman, a long-serving energy-services executive, by Grenadier Realty Corporation and GRC Management (collectively, Grenadier). Tillman alleged that age discrimination, in violation of the Age Discrimination in Employment Act (ADEA), was the but-for cause of her termination, following more than four decades at the company in energy-related roles, culminating as Director of Energy Services.
The district court (E.D.N.Y., Matsumoto, J.) granted summary judgment to Grenadier on the ADEA claim, holding that Tillman could not generate a triable inference that her termination was motivated by age rather than the company’s undisputed financial distress after the loss of its largest contract. The court declined supplemental jurisdiction over parallel NYSHRL and NYCHRL claims. On appeal, Tillman contended that the district court erred in finding no prima facie inference and, alternatively, in finding that she failed to show pretext. She relied on alleged disparate treatment leading up to her termination, a purported demotion placing her under a younger manager, workplace comments (including an inquiry about retirement), and statistical assertions about older employees.
The Second Circuit, reviewing de novo, affirmed. Assuming arguendo that a prima facie case existed, the panel held that no rational jury could find Grenadier’s stated reasons—documented financial hardship, restructuring, and outsourcing—to be pretextual or that age was the but-for cause of the termination.
Summary of the Opinion
- Standard Applied: The court applied the McDonnell Douglas burden-shifting framework to the ADEA claim and reiterated the ADEA’s but-for causation requirement (citing Bucalo and Lively).
- Employer’s Legitimate Reason: Grenadier lost its largest, most profitable contract (Starrett City), which accounted for more than a third of company revenue. In response, it executed company-wide cost-cutting, restructuring, and outsourcing, including eliminating Tillman’s role and offering her a consultancy she declined.
- No Pretext / No But-For Causation: The record contained substantial, corroborated documentation of financial distress and restructuring decisions. Plaintiff’s evidence—stray remarks about retirement, questions about commuting, assignment under a younger manager, workspace changes after a location move, generalized statistics, and broad attacks on “interested” witnesses—did not create a triable issue of pretext or but-for causation.
- Supplemental Jurisdiction: Because the sole federal claim was properly dismissed on summary judgment, the court upheld the district court’s decision to decline supplemental jurisdiction over the state and city claims (citing Pension Benefit Guaranty Corp.).
Factual Context Driving the Decision
The court emphasized several undisputed facts:
- Grenadier’s decades-long revenue-sharing arrangements: Tillman performed substantial work for both Grenadier and Starrett City; those entities shared her salary from the 1970s until February 2019.
- The Starrett City contract’s importance: it constituted more than one-third of Grenadier’s revenue. Its loss severely impaired finances.
- Company-wide cost cutting and restructuring: reduced severance, lowered vacation benefits, cheaper health plans, multiple layoff rounds, and an operations review by Javelin Residential (founded by Ryan Moorehead).
- Restructuring of Tillman’s role: based on Javelin’s recommendations, Tillman’s title changed from Senior Vice President for Energy and Special Projects to Director of Energy Services, and her function moved under the Construction and Technical Services Department led by Pat LoRusso.
- Leadership change and outsourcing: By December 2019, Moorehead had become CEO and President. He proposed converting Tillman’s role to a consultancy or outsourcing to third parties. Grenadier offered Tillman a consultancy (a $3,300 monthly retainer to oversee seven properties). She declined the substantial pay decrease and further negotiation. Grenadier terminated her employment in March 2020 and outsourced the work to third-party consultants paid by commissions on energy purchase contracts.
Analysis
Precedents and Authorities Cited
- Summary judgment standards:
- Fed. R. Civ. P. 56(a): summary judgment is proper when no genuine dispute of material fact exists and the movant is entitled to judgment as a matter of law.
- Garcia v. Hartford Police Dep’t (2d Cir. 2013): de novo review; all ambiguities/inferences drawn against the movant.
- Burden-shifting and causation under the ADEA:
- McDonnell Douglas Corp. v. Green (U.S. 1973): three-stage framework—prima facie case; employer’s legitimate, non-discriminatory reason; plaintiff’s proof of pretext and discriminatory intent.
- Bucalo v. Shelter Island Union Free Sch. Dist. (2d Cir. 2012): ADEA claims use McDonnell Douglas; articulation of prima facie elements.
- Lively v. WAFRA Inv. Advisory Grp., Inc. (2d Cir. 2021): ADEA requires plaintiff to prove age was the but-for cause of the adverse action.
- Stray remarks and retirement inquiries:
- Raskin v. Wyatt Co. (2d Cir. 1997): discussion of age or retirement, without more, does not create an inference of discrimination.
- Bernstein v. N.Y.C. Dep’t of Educ. (2d Cir. 2022) (summary order): questions about retirement plans are legitimate and insufficient by themselves to imply age bias.
- Economic motives and restructuring:
- Criley v. Delta Air Lines, Inc. (2d Cir. 1997) (per curiam): economic concerns underlying employment decisions, even if correlated with age, are not age discrimination.
- Credibility at summary judgment and “interested” witnesses:
- Frost v. N.Y.C. Police Dep’t (2d Cir. 2020): courts generally do not grant summary judgment by weighing credibility; but generalized credibility attacks cannot defeat summary judgment.
- Island Software & Computer Serv., Inc. v. Microsoft Corp. (2d Cir. 2005); McCullough v. Wyandanch Union Free Sch. Dist. (2d Cir. 1999); Chiaramonte v. Animal Med. Ctr. (2d Cir. 2017) (summary order): broad, conclusory attacks on “interested” witness credibility are insufficient absent concrete contradiction; such testimony can support summary judgment when corroborated by documents.
- Sista v. CDC Ixis North America (2d Cir. 2006): pretext may be shown by undermining the employer’s credibility or by reliance on the prima facie case; plaintiff’s proof must show the proffered reason is unworthy of credence.
- Supplemental jurisdiction:
- Pension Benefit Guaranty Corp. ex rel. St. Vincent Catholic Med. Ctrs. Retirement Plan v. Morgan Stanley Inv. Mgmt. Inc. (2d Cir. 2013): affirming that courts may decline supplemental jurisdiction when federal claims are dismissed.
Legal Reasoning
The panel’s reasoning proceeds along the McDonnell Douglas trajectory, addressing pretext and causation directly:
- Prima facie case assumed, not decided: The court assumed arguendo that Tillman had established a prima facie case, thereby moving to the second and third stages.
- Employer’s legitimate reason met: Grenadier proffered substantial evidence that the termination was part of a broader, documented response to severe financial distress after losing Starrett City—its largest revenue source. The restructuring involved cost reductions and outsourcing, with third-party consultants assuming the functions of the eliminated position.
- No pretext and no but-for causation:
- Documentary corroboration: The company’s explanation was corroborated by extensive contemporaneous documentation. The court emphasized that plaintiff did not produce conflicting evidence—such as contradictory documents, sworn testimony, or strong proof of age-based intent—to cast doubt on Grenadier’s rationale.
- Stray remarks/retirement inquiry: Moorehead’s question about how long Tillman planned to work (and a separate question about commuting versus remote work) did not support an inference of discriminatory animus under Raskin and Bernstein.
- Alleged demotion under a younger supervisor: The placement under Pat LoRusso, a younger department head, followed Javelin’s cost-saving recommendations. Tillman herself acknowledged the economic motivation (LoRusso earned less, potentially benefiting the company financially). Under Criley, cost considerations—even if correlated with age—are legitimate and not age discrimination.
- Workspace changes: Receiving a cubicle rather than an office after the move to Industry City did not suggest age bias, given the company-wide office consolidation and limited number of enclosed offices; other director-level employees likewise lacked enclosed offices.
- Statistics and other personnel decisions: Plaintiff’s statistical assertions did not demonstrate disproportionate terminations of older, similarly-situated employees. The former CEO’s termination months earlier did not create a triable issue regarding Tillman’s termination, in light of the uncontroverted reasons specific to her role.
- “Interested witnesses” argument: Although courts do not weigh credibility at summary judgment, conclusory attacks on credibility cannot defeat summary judgment. Here, witness accounts of financial drivers were supported by contemporaneous documents. Plaintiff provided no concrete contradictions or strong evidence of discriminatory motive to undermine that record (Frost; Island Software; McCullough; Chiaramonte; Sista).
- Replacement versus outsourcing: The company did not hire a new employee to assume Tillman’s duties; rather, the functions were outsourced to third parties compensated through commissions on energy purchase contracts, with two former coworkers only supervising aspects of vendor performance. This undermined any inference of a younger replacement and supported the economic rationale.
- Supplemental jurisdiction: Because the federal ADEA claim was properly dismissed, the district court’s decision to decline jurisdiction over state/city claims was undisturbed.
Impact and Practical Significance
Although a non-precedential summary order, the decision is a strong, persuasive reaffirmation of several practical points in ADEA litigation:
- Documented financial restructuring can foreclose pretext: Employers that contemporaneously document financial distress, restructuring rationales, board-level deliberations, and the operational necessity of role elimination are well-positioned to prevail at summary judgment, even when plaintiffs offer circumstantial evidence of disparate treatment.
- Outsourcing is distinct from replacement: Eliminating a role and outsourcing its functions—especially to vendors paid through performance-linked commissions—can substantially weaken any inference that a younger employee replaced the plaintiff.
- Stray remarks are not enough: Isolated or facially neutral inquiries about retirement plans or commuting arrangements typically do not create an inference of age bias without a tighter link to the adverse action or broader evidence of discriminatory intent.
- Generalized statistics must be probative: Aggregates that fail to compare similarly-situated employees of different ages—or that do not account for structural changes and RIFs—will not carry a plaintiff’s burden at the pretext stage.
- Credibility attacks require substance: Broad attacks on the credibility of “interested” management witnesses will not avoid summary judgment absent concrete contradictions or documentary inconsistencies; where the employer’s account is corroborated by records, plaintiffs need more than speculation to survive.
- But-for causation remains rigorous: Even if a prima facie case exists, the ADEA’s but-for standard demands persuasive evidence that age, not financial or organizational reasons, actually drove the termination.
- State/city claims often fall with the federal claim: Where a federal court properly disposes of the sole federal claim, it will typically decline supplemental jurisdiction over state and local claims absent unusual circumstances.
Complex Concepts Explained
- McDonnell Douglas framework:
- Prima facie case: Minimal showing that the plaintiff is in the protected class (40+), was qualified, suffered an adverse action, and circumstances suggest discrimination.
- Employer’s reason: The employer must produce evidence of a legitimate, non-discriminatory reason (e.g., financial restructuring).
- Pretext and causation: The burden returns to the plaintiff to show the reason is false or not the real reason and that age was the but-for cause of the adverse action.
- But-for causation: The plaintiff must prove that, absent consideration of age, the adverse action would not have occurred. It is a demanding standard.
- Stray remarks doctrine (in substance): Isolated or general comments about age or retirement, without a direct nexus to the decision-making process, rarely suffice to prove discriminatory intent.
- Reduction in Force (RIF) and outsourcing: Employers may restructure by eliminating positions or outsourcing functions for legitimate economic reasons. When well-documented and applied consistently, such actions typically satisfy the employer’s burden and make it harder for plaintiffs to demonstrate pretext.
- “Interested” witness credibility at summary judgment: Courts do not typically weigh credibility on summary judgment. But a plaintiff cannot defeat summary judgment through mere speculation that employer witnesses are untruthful; concrete contradictory evidence is required.
- Supplemental jurisdiction: Federal courts may decline to decide state or local claims once the federal claims are dismissed, often to allow state courts to address state-law issues.
Key Takeaways
- Assuming a prima facie case, the Second Circuit found the employer’s robust, documented financial and restructuring rationale unrebutted; plaintiff’s evidence did not create a triable issue on pretext or but-for causation.
- Routine retirement/commuting inquiries and workplace reassignments during a company-wide restructure did not imply age bias in this record.
- Outsourcing former responsibilities—rather than hiring a younger replacement—supported the employer’s legitimate, non-discriminatory explanation.
- Generalized statistical assertions and conclusory credibility attacks were insufficient to avoid summary judgment in the face of corroborated economic evidence.
- With the federal claim properly dismissed, the district court’s refusal to exercise supplemental jurisdiction over NYSHRL/NYCHRL claims was affirmed.
Conclusion
In this non-precedential but instructive summary order, the Second Circuit reaffirms that well-documented financial distress, restructuring, and outsourcing can defeat an ADEA plaintiff’s effort to show pretext and but-for causation at the summary judgment stage. The court’s analysis underscores the limited probative value of isolated retirement inquiries, generalized statistics, and speculative credibility challenges when arrayed against contemporaneously documented business reasons. For employers, the decision illustrates the importance of meticulous documentation and consistent restructuring logic; for employees, it highlights the evidentiary rigor required to overcome a robust record of legitimate business rationale under the ADEA’s but-for standard.
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