MEMORANDUM OPINION AND ORDER
J. GREER, District Judge
This products liability matter is before the Court on the plaintiffs' "Motion to Reconsider Order Granting J.D. Specialties, Inc.'s and Taco Bell of America, Inc.'s Motions for Summary Judgment," [Doc. 48]. Previously, the defendants argued that the plaintiffs' action against them was time-barred pursuant to Tennessee Code Annotated sections 29-28-103 and 28-3-202. See Tenn. Code Ann. § 29-28-103(a) and 28-3-202. This Court denied the motions on those grounds because it found that there was a genuine issue of material fact as to whether either defendant "designed" the ladder at issue. Thus, this Court in essence found that there was a genuine issue of material fact as to whether section 28-3-202 applied in the case. It is this decision that the defendant J.D. Specialties, Inc. ("J.D.") moved the Court to reconsider. The Court granted the motion.
Thereafter, this Court held that whoever "designed" the ladder was immaterial because even assuming it was J.D. who designed it, the ladder was an improvement to real property. In addition, the action was filed more than four years after substantial completion of the improvement. Thus, the Court determined that regardless of who actually designed the ladder, section 28-3-202 applied and time-bars the action.
In that same Order, this Court put the plaintiffs on notice that it would sua sponte grant summary judgment on Vann Owens Steel, Inc.'s ("Vann Owens Steel") behalf for the same reason, i.e. the action against is time-barred. The Court gave the plaintiff until December 1, 2010, to file a brief stating any opposition to this sua sponte dismissal.
The plaintiffs then filed the present motion to reconsider on November 24, 2010. They argue that "the Court incorrectly applied T.C.A. § 28-3-202 because it is inapplicable in this action since the ladder in question was of a defective design when it was manufactured in Alabama, long before it was anticipated to place said ladder onto Taco Bell restaurant in Strawberry Plains." They further claim that "[n]one of the Defendants are in a class that constructed or erected an improvement to real property that would allow them to claim the special exemption" found in the statute. They rely upon Pridemark Custom Plating, Inc. v. UpJohn Company, 702 S.W.2d 566 (Tenn. Ct. App. 1985), Langford v. Gatlinburg Real Estate Rental, Inc., 499 F.Supp.2d 1042 (E.D. Tenn. 2007), and Durham v. Herbert Olbrich GMBH Co., 404 F.3d 1249 (10th Cir 2005), which is not binding upon this Court. They do not separately address whether the action against Vann Owens Steel should be dismissed. However, they refer to Vann Owens Steel from time to time in the Memorandum.
The Federal Rules of Civil Procedure do not explicitly address motions for reconsideration of interlocutory orders. The Court's power to reconsider exists under federal common law, see, e.g., City of Los Angeles v. Santa Monica Baykeeper, 254 F.3d 882, 886 (9th Cir. 2001), and there is additional support in Federal Rule of Civil Procedure 54(b). See Fayetteville v. Commercial Builders, Inc., 936 F.2d 1462, 1469-70 (4th Cir. 1991) (approving of Rule 54(b) as a proper procedural vehicle for bringing motions to reconsider interlocutory orders). Under Rule 54(b), an order that determines fewer than all the claims or rights of the parties does not terminate the action, and the order is "subject to revision at any time before the entry of judgment adjudicating all the claims and the rights and liabilities of all the parties."
Section 29-28-103(a) states:
(a) Any action against a manufacturer or seller of a product for injury to person or property caused by its defective or unreasonably dangerous condition must be brought within the period fixed by §§ 28-3-104, 28-3-105, 28-3-202 and 47-2-725, but notwithstanding any exceptions to these provisions, it must be brought within six (6) years of the date of injury, in any event, the action must be brought within ten (10) years from the date on which the product was first purchased for use or consumption, or within one (1) year after the expiration of the anticipated life of the product, whichever is the shorter, except in the case of injury to minors whose action must be brought within a period of one (1) year after attaining the age of majority, whichever occurs sooner.
Id. The defendants relied upon sections 28-3-202 and 47-2-725 in arguing the actions are
time-barred. As this Court explained previously, section 28-3-202 is itself a statute of repose and states:
All actions to recover damages for any deficiency in the design, planning, supervision, observation of construction, or construction of an improvement to real property, for injury to property, real or personal, arising out of any such deficiency, or for injury to the person or for wrongful death arising out of any such deficiency, shall be brought against any person performing or furnishing the design, planning, supervision, observation of construction, construction of, or land surveying in connection with, such an improvement within four (4) years after substantial completion of such an improvement.
Tenn. Code Ann. § 28-3-202. Once again this Court is asked to decide whether this section applies.
As set forth in this Court's prior Orders, in determining whether this statute applies, and thus, whether this action is time-barred, this Court considers three main issues: (1) whether the attachment of the ladder was an improvement to real property; (2) whether the defendant "perform[ed] or furnish[ed] the design, planning, supervision, observation of construction, construction of, or land surveying in connection with, such improvement"; and (3) whether such an action was brought "within four (4) years after substantial completion of such an improvement." Tenn. Code Ann. § 28-3-202.
It now seems that the parties are once again focused upon the second consideration. In the original Memorandum Opinion, this Court discussed the second consideration because there seemed to be an issue of fact as to who "designed" the ladder. Because all aspects of section 28-3-202 must be met in order to apply, this Court originally determined that there was a genuine issue of material fact as to the design, and thus, could not determine whether the statute applied in regards to J.D. and Taco Bell. J.D. argued in its motion to reconsider that decision that, even if it did design the ladder, then section 28-3-202 still applies. Thus, it claims that the action is time-barred. In essence, J.D. argued that who actually "designed" the ladder was immaterial because the statute would still apply and bar the action.
The plaintiffs seem to shift theories on who actually designed the ladder rather frequently. In addition, the defendants, of course, do not want to admit that they designed the ladder for fear of ultimate liability, yet they argue that the statute applies to time-bar the action. In order for the statute to apply, a defendant must have "perform[ed] or furnish[ed] the design, planning, supervision, observation of construction, [or] construction of," id., the ladder. Thus, the dilemma.
What it boils down to is that someone had to design and manufacture the ladder. Here, this Court gleans from the Complaint, Amended Complaint, and the evidence in the record that the plaintiffs allege that Vann Owens Steel "manufactured" the ladder based on drawings and specifications from Taco Bell and oral specifications by Duke, the president of J.D. Thus, the plaintiffs allege that Vann Owens Steel "manufactured" the ladder and that J.D. and Taco Bell "designed" the ladder. In addition, J.D., via Duke, observed construction of the Taco Bell fastfood restaurant in question. It is unclear whether Duke observed the actual attachment of the ladder. It is never alleged or asserted that Vann Owens Steel or Taco Bell observed the attachment of the ladder to the building.
This distinction is significant for reasons stated later in the opinion.
A "`[p]roduct liability action' . . . includes all actions brought for or on account of personal injury, death or property damage caused by or resulting from the manufacture, construction, design, formula, preparation, assembly, testing, service, warning, instruction, marketing, packaging or labeling of any product." Tenn. Code Ann. § 29-28-102. In order to recover, a plaintiff must prove that the defendant was the manufacturer or the seller of the product. See id. § 29-28-103; see also T.P.I. Crim. 10.01 (12th ed. 2008). A "manufacturer" is a person or company that designs, fabricates, produces, compounds, processes or assembles any product or its component parts. See id. § 29-28-102(4). A "seller" "means any individual or entity engaged in the business of selling a product, whether such sale is for resale, or for use or consumption." Id. § 29-28-102(7).
In order to determine whether section 28-3-202 applies, this Court will address each defendant separately. First, this Court will address whether the statute applies to Taco Bell. To be sure, the allegation against Taco Bell is that it provided Vann Owens Steel drawings and specifications from which to build the ladder. Thus, the plaintiffs allege that Taco Bell was the designer of the ladder. Although the Amended Complaint does not specifically allege that Taco Bell was a "manufacturer" or "seller," it does allege that it in essence designed the ladder. The definition of "manufacturer" includes a company that "designs" the product or its component parts. See Tenn. Code Ann. § 29-28-102(4).
Section 28-3-202 applies to "any person performing or furnishing the design" of the improvement to real property. Id. § 28-3-202. The plaintiffs state that according to Pridemark, "design" as referred to in section 28-3-202 "does not mean the general design of a manufactured product which might be used in improvements to real estate. The meaning of the word is limited to the architectural or engineering design of a particular building or the particular parts thereof." 702 S.W.2d at 570. They argue that the statute in this regard does not apply because Vann Owens manufactured 41 ladders just like the one in question based on specifications provided by Taco Bell. While that is true, the record also shows that these ladders were all manufactured according to the same specifications and were designed for other Taco Bell fastfood restaurants that were the same but built in different locations. Thus, this ladder was still manufactured for a "particular building" and not just a general product which would fit any building in the general stream of commerce. It was not a general product which would then be sold to the general public. Thus, section 28-3-202 would apply to a defendant who "designed" this particular ladder.
The next step of the inquiry would be to decide whether there was a genuine issue of material fact as to whether Taco Bell was a "person" who "furnish[ed] the design." Id. It is true that this Court has previously held that there is a genuine issue of material fact as to who actually designed the ladder. For it seems, based on the record, that any of the defendants or a combination of these defendants may have designed the ladder. As to Taco Bell, however, this fact is not material. Even assuming it did design the ladder, the action against it would then be time-barred. Assuming Taco Bell did not design the ladder, then the action against it should be dismissed for failure to state a cause of action as to it.
To sustain a products liability action, the defendant must be a manufacturer or seller. It is undisputed that Taco Bell is not the seller of the ladder. Moreover, based on the allegations, and when viewing the record in the light most favorable to the plaintiffs, the only way Taco Bell could meet the definition of manufacturer is if it designed the ladder. Therefore, if this Court assumed it did not design the ladder for purposes of applying section 28-3-202, then the action should still be dismissed because Taco Bell does not meet the definition of manufacturer. As such, the plaintiffs motion to reconsider as to Taco Bell is DENIED.
Second, this Court will analyze whether section 28-3-202 applies to J.D. Again, the allegations in the Amended Complaint are that Vann Owens Steel "manufactured" the ladder based on drawings and specifications from Taco Bell and oral specifications by Duke, the president of J.D. Thus, it is alleged that J.D. also furnished the design of the ladder. It is not specifically alleged in the Amended Complaint that J.D. did anything other than design. Another aspect of J.D.'s possible participation surrounding the ladder was introduced into the record by one of Duke's affidavits. He stated that J.D., through him, "was involved with the Taco Bell buildings as part of the construction of said buildings which included observation of the construction of said buildings." The plaintiffs never alleged that J.D. was involved in the observation of the attachment of the ladder to the building.
The Amended Complaint also alleged that " Defendants negligently designed, prepared, and packaged the ladder in question." (Emphasis added.) However, there is no evidence in the record that either J.D. or Taco Bell prepared or packaged the ladder. The Amended Complaint also states that the " Defendants were sellers engaged in the business of selling such a product," i.e. the ladder. (Emphasis added.) However, no facts in the record support the allegation that J.D. or Taco Bell sold the ladder in question or were in the business of selling ladders. Furthermore, the Amended Complaint states that it was Vann Owens Steel who placed the ladder into the stream of commerce. Moreover, Duke stated in his first affidavit that Vann Owens Steel sold the ladder, and the plaintiffs did not specifically dispute this fact in their response.
Finally, at times in responding or reply to various motions, the plaintiffs state in argument that J.D. "took part in the design and manufacture." However, when viewing the record in the light most favorable to the plaintiffs, the evidence shows that J.D. may have only taken part in the design, not in the other aspects which make up the definition of manufacturer.
All that being said, considering that the only allegation against J.D. is in the design of the ladder, then the same analysis that this Court applied to Taco Bell would apply to J.D. Thus, the issue of fact as to whether J.D. designed the ladder is likewise immaterial. The action would be time-barred if it did, and the action should be dismissed if it did not for failure to state a cause of action. Accordingly, the motion to reconsider in regard to J.D. is also DENIED.
It is true, however, that J.D. asserted that it observed the construction of the building. Pridemark held that "the manufacturer or seller of a product installed in and becoming a part of the real property in connection with the improvement thereof is covered by the time period referred to in T.C.A. § 28-3-202 if the manufacturer observes the installation of its product during the construction." 702 S.W.2d at 570. Here one could argue that there is an issue of fact as to whether the statute applies because it is unclear whether J.D. observed the installation of the ladder. However, as to J.D., it is never alleged that it was the manufacturer in any sense other than designer. It also was never alleged that J.D. was the seller of the ladder. Thus, this portion of the statute does not apply.
In addition, it is important to note that the statute is written in the disjunctive. Thus, the four-year statute of repose would apply in a situation where a plaintiff sued a person "for any deficiency in the design, planning, supervision, observation of construction, or construction of an improvement to real property." Tenn. Code Ann. § 28-3-202. Here, as stated, the plaintiffs only allege in the Amended Complaint deficiency in design as to J.D., and they have consistently argued that the "observation of construction" portion of section 28-3-202 does not apply.
Lastly, this Court will address whether section 28-3-202 applies to Vann Owens Steel. Once more, the plaintiffs allege that Vann Owens manufactured the ladder based on the specifications of Taco Bell and J.D. via Duke. They also contend that Vann Owens Steel placed the ladder into the stream of commerce, i.e. Vann Owens Steel was the seller. This Court will begin the analysis of whether section 28-3-202 applies to Vann Owens Steel in terms of being an alleged "designer" of the ladder. At first glance, it seems that the same result is warranted. Here, however, unlike Taco Bell and J.D., the issue of fact as to who designed the ladder is material because the plaintiffs allege that Vann Owens did more than just design the ladder. They also allege that it assembled and sold the ladder. Thus, depending on the factual scenario, there could be different results. Because of the possible different results, this Court cannot make the determination of whether the statute applies to Vann Owens Steel and, thus, if the action against them is time-barred.
For example, if this Court assumes that Vann Owens Steel did design the ladder, then the action could be time-barred because section 28-3-202 encompasses the designer. However, if Vann Owens Steel did not design the ladder, then the action could still stand because of the other allegations against them as seller and manufacturer. In this context, section 28-3-202 would not bar the action because this Court would have to look at the other actions in the statute. In so doing, none of the other actions apply. The plaintiffs never allege that Vann Owens Steel planned, supervised, observed construction or constructed the ladder in terms of attaching it to the real property. Under Pridemark, the manufacturer or seller must observe "the installation of its product during the construction." 702 S.W.2d at 570.
Because the issue of fact as to the second consideration in section 28-3-202 is material, this Court declines to grant summary judgment in Vann Owens Steel's favor. Thus, the motion to reconsider in regard to Vann Owens Steel is GRANTED.
In sum, the plaintiffs' motion in regard to Taco Bell and J.D. is DENIED. Accordingly, the case against them remains DISMISSED. As to Vann Owens Steel, the motion is GRANTED. The action shall remain pending against it.
surrounding circumstances....'"
Ibid. (quoting
Perry v. Sindermann, 408 U.S. 593, 602 (1972));
see also Bishop v. Wood, 426 U.S. 341, 344 (1976).
Thus, plaintiffs' due process claim "hinges on whether anything in Tennessee statute, common law, or regulation creates [a property] interest" in their continued employment as captains. Lisle v. Metro. Gov't of Nashville, 73 F. App'x 782, 785 (6th Cir. 2003). As a baseline, "Tennessee has long recognized the doctrine of employment at will, with the mutual right of either party to terminate such a relationship with or without cause." Id. at 786 (quoting Brown v. City of Niota, 214 F.3d 718, 720 (6th Cir. 2000)). Thus, plaintiffs' asserted property interest turns on the existence of some statute, regulation, or agreement that varies this background rule.
A. Section 67 of the Memphis City Charter
First, plaintiffs argue that § 67 of the Charter, which entitles officers with 30 years' service to "the rank of captain[,]" "all the salary, emoluments and other privileges of said rank[,]" and "a pension as captain," creates a property interest in their continued employment as captains. While this is not a facially implausible reading of § 67, the Tennessee state courts have repeatedly held to the contrary. See Dunlap v. City of Memphis, No. W2003-02649-COA-R3-CV, 2004 Tenn. App. LEXIS 738, at *12 (Tenn. Ct. App. Nov. 12, 2004) ("[Section 67] is a guarantee that officers with thirty years of service can retire at the rank of Captain, with pension benefits of a Captain, but [it] provides no guarantee of employment beyond the automatic promotion." (emphasis in original)); Posey v. City of Memphis, 23 S.W.3d 332, 335 (Tenn. Ct. App. 2000) ("[T]he automatic promotion provision of Section 67 [is] purely a retirement tool.... [It guarantees] no automatic benefit if employment is continued after thirty years."); Burrell v. City of Memphis, No. 29, 1989 Tenn. App. LEXIS 544, at *3 (Tenn. Ct. App. Aug. 16, 1989) ("[W]hile Section 67 of the Charter provide[s] for automatic promotion to captain [after] thirty years of service as well as a captain's pension upon retirement, the section [does] not require the City to continue employment of the plaintiffs for any length of time.").
While we are not bound by these cases, "[w]e will accept the holding of a state intermediate appellate court with respect to state law unless we determine the highest court of the state would decide otherwise." United States v. Philp, 460 F.3d 729, 732 (6th Cir. 2006). We see no reason to believe that the Tennessee Supreme Court would reject this twenty-year-old line of cases. Accordingly, we agree with the district court that the abolition of the captain rank did not derogate from any property interest guaranteed by § 67.
On the other hand, as interpreted by the Tennessee courts, § 67 clearly does give plaintiffs a protected property interest in their captain-level pension benefits. However, plaintiffs' pensions were not affected by the abolition of the captain rank.
B. Section 246 of the Memphis City Charter
Next, plaintiffs argue that the abolition of the captain rank violated a property interest secured by § 246 of the Charter, which provides that "[t]he City may terminate, suspend, or demote an employee for just cause____" Plaintiffs are correct that "[s]tatutes providing that [public] employees cannot be discharged or demoted without cause... give the employee a protected property interest in continued employment" cognizable under the Due Process Clause. Williams v. Comm. of
Kentucky, 24 F.3d 1526, 1537-38 (6th Cir. 1994). However, we agree with the district court that § 246 is simply inapplicable to terminations or demotions for other-than-disciplinary reasons.
Section 246 falls under Article 34 of the City Charter, which creates and empowers the City's Civil Service Commission ("Commission"). That § 246 is found under this Article implies that its "just cause" language must be interpreted in light of the purpose and jurisdiction of the Commission, which is "to review disciplinary actions____" Charter § 245; see also City of Memphis v. Civil Serv. Comm'n, 1985 Tenn. App. LEXIS 3244, at *5 (Tenn. Ct. App. Nov. 19, 1985) ("[T]he Commission does not have jurisdiction to review non-disciplinary employee terminations by the City."). It would be illogical to conclude that the drafters of § 246 intended its "just cause" language to create a freestanding property interest that the Commission could not enforce. Furthermore, immediately following the "just cause" language at issue, § 246 states that "[e]numeration of the above-stated disciplinary actions [i.e., termination, suspension, or demotion], which are reviewable by the [C]ommission, shall not be construed as a limitation on powers of the City to impose other less stringent disciplinary measures which shall not be appealable to the [C]ommission" (emphasis added). This proviso strongly suggests that section's "just cause" language is inapplicable to non-disciplinary personnel actions. We therefore hold that any property interest created by § 246 is not abridged by non-disciplinary personnel actions such as the one at issue here.
C. Implied Contract
Finally, plaintiffs argue that the City's course of conduct-specifically, the Department's past practice of allowing all captains to retain that rank until they chose to retire, were promoted, or were terminated for cause-gave rise to a property interest in the form of an implied contract of continued employment. While the Supreme Court has recognized that a property interest in continued employment can be created by "agreements implied from the [employer's] words and conduct in the light of the surrounding circumstances," Perry, 408 U.S. at 602 (internal quotation marks omitted), it has emphasized that "the sufficiency of [such a] claim of entitlement must be decided by reference to state [contract] law." Bishop, 426 U.S. at 344; see also Perry, 408 U.S. at 602 n.7 ("If it is the law of Texas that a teacher in the respondent's position has no [implied contractual] claim to job tenure, the respondent's claim would be defeated.").
Under Tennessee contract law, a contractual interest in continued employment will not be inferred on behalf of an at-will employee from an employer's conduct absent a "show[ing] that the agreement... was supported by adequate consideration [other than the employee's past services], that there was a mutual assent to the terms of the agreement and that it was sufficiently definite to be enforceable." Price v. Mercury Supply Co., Inc., 682 S.W.2d 924, 933 (Tenn. Ct. App. 1984) (holding that employer's statement that otherwise at-will employee "would never have to worry about employment because of the service he had rendered to the company in the past" did not create enforceable expectation of continued employment); see also White v. Fort Sanders-Park West Med. Ctr., No. E2006-00330-COA-R3-CV, 2007 WL 241024, at *3 (Tenn. Ct. App. Jan. 29, 2007). Here, as the district court properly noted, "[p]laintiffs have offered no evidence of consideration for the implied contract beyond their services, for which they were undisputedly paid." Aldridge v. City of Memphis, No. 05-2966 B, 2007 WL 4570881, at *5 (W.D. Tenn. Dec. 27, 2007).
Furthermore, background circumstances establish that no mutual understanding of life tenure could reasonably have existed here. Although neither party cites it, we take judicial notice that the
Memphis City Code contains a section providing that the "[s]ervices of any employee may be terminated when the necessity for his or her job or position no longer exists or when funding is no longer available...." City Code § 3-8-7 (2007) (formerly § 9-41(1985)). Moreover, it is undisputed that, over twenty years ago, the City eliminated the tenured captain rank in its Fire Department, which was governed by the same charter provision, and outright terminated all but one of the officers holding that rank. See Burrell, 1989 Tenn. App. LEXIS 544, at *4-*5.
Accordingly, no implied contract exists under Tennessee law, and thus, there is no property interest protected by the Due Process Clause.
Before the trial court, plaintiffs asserted a state-law breach-of-implied-contract claim against the City in addition to their due-process claim based on implied contract. Plaintiffs have not argued their independent contract claim on appeal; accordingly, it is waived. See United States v. Phinazee, 515 F.3d 511, 520 (6th Cir. 2008). Even if they had pursued their contract claim, however, it would fail for these same reasons.
II. Race and Sex Discrimination
Plaintiffs assert that the decision to eliminate the captain rank constituted intentional disparate treatment on the basis of race and sex. Where, as here, no direct evidence of discrimination exists, disparate-treatment race-and sex-discrimination claims are analyzed using the well-known McDonnell Douglas proof structure. Upshaw v. Ford Motor Co., 576 F.3d 576, 584 (6th Cir. 2009) (citing McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802 (1973)). We assume, without deciding, that plaintiffs are able to make out a prima facie case of race and sex discrimination under McDonnell Douglas.
Plaintiffs' claims under the Equal Protection Clause, 42 U.S.C. § 1981, Title VII, and the THRA are analyzed identically. See Miller v. City ofCanton, 319 F. App'x 411, 419 (6th Cir. 2009); Madden v. Chattanooga City Wide Serv. Dep't, 549 F.3d 666, 673 (6th Cir. 2008); Gutzwiller v. Fenik, 860 F.2d 1317, 1325 (6th Cir. 1988). We note that 42 U.S.C. § 1981 proscribes intentional racial discrimination in "the making, performance, modification, and termination of contracts, and the enjoyment of all benefits, privileges, terms, and conditions of the contractual relationship." 42 U.S.C. § 1981(b) (emphasis added). District courts in this circuit have held that at-will employees in Tennessee possess a "contract" for purposes of § 1981. See Henry v. Trammell Crow SE, Inc., 34 F. Supp. 2d 629, 635 (W.D. Tenn. 1998). We assume arguendo that this is the case.
Once a prima facie case of discrimination is established, the employer "must articulate a legitimate non-discriminatory reason" for the employment decision. Upshaw, 576 F.3d at 585. "This is merely a burden of production, not of persuasion, and it does not involve a credibility assessment." Ibid. The burden that shifts to the defendant, therefore, is to rebut the presumption of discrimination by producing "admissible evidence of a legitimate, nondiscriminatory reason" for the elimination of the captain position. Blair v. Henry Filters, Inc., 505 F.3d 517, 524 (6th Cir. 2007). Defendants submit that the captain rank was eliminated because it was "not operationally necessary" and "superfluous"-i.e., captains were paid a major's salary while many performed the duties of employees as many as three ranks lower and who earned as much as $17,802.93 less per year. Appellees' Br. at 37-39. Thus, defendants have met their burden of production by establishing a nondiscriminatory reason for terminating the captain position, Blair, 505 F.3d at 524, and "the mandatory presumption of discrimination created by the prima facie test drops from the case." Lindsay v. Yates, 578 F.3d 407, 421 (6th Cir. 2009) (internal quotation marks omitted).
If the employer carries its burden, "the plaintiff must identify evidence from which a reasonable jury could conclude that the proffered reason is actually a pretext for unlawful discrimination." Blair, 505 F.3d at 524. "A plaintiff may establish that an employer's stated reason for its employment action was pretextual by showing that the reason (1) had no basis in fact, (2) did not actually motivate the challenged conduct, or (3) is insufficient to explain the challenged conduct." Upshaw, 576 F.3d at 586. "The plaintiff must produce sufficient evidence from which the jury could reasonably reject [the defendants'] explanation and infer that the defendants intentionally discriminated against him." Ibid. (internal quotation marks omitted) (alteration in original); see also St. Mary's Honor Ctr. v. Hicks, 509 U.S. 502, 511 (1993) ("[R]ejection of the defendant's proferred reasons will permit the trier of fact to infer the ultimate fact of intentional discrimination" but does not "compel[]" a finding of discrimination.).
To show that defendants' asserted rationale was a pretext for discrimination, plaintiffs first argue that there was "no study that concluded the captain rank caused any inefficiency in police operations" and "no report or study that showed how abolishing the rank... could produce any savings for the City." Appellants' Br. at 37-38, 43. However, there is no dispute that many (if not most) captains drew salaries out of proportion to the job duties that they actually performed. It does not take a formal study to draw a permissible conclusion that this was inefficient; "[t]he decisional process used by the employer [need not] be optimal [nor must it leave] no stone unturned." Haughton v. Orchid Automation, 206 F. App'x 524, 532 (6th Cir. 2006) (quoting Smith v. Chrysler Corp., 155 F.3d 799, 806 (6th Cir.1998)) (second and third alterations in Haughton); accord EEOC v. Horizon/CMS Healthcare Corp., 220 F.3d 1184, 1198 (10th Cir. 2000) ("[T]he failure to conduct a formal study of the benefits realized by [an employment practice], standing alone, does not undermine Defendant's assertion that it had a good-faith belief the [practice] reduced... costs."). The absence of a formal cost-cutting study does not provide sufficient evidence from which a jury could infer that the defendants discriminated against the captains on the basis of race or sex.
Plaintiffs also allege that defendants' current justification of the abolition-that the rank was "operationally unnecessary"-is inconsistent with Godwin's initial statement upon announcing the abolition that the City was "in the midst of a serious financial situation" and that "[i]n order for the City to have funds to meet payroll and its obligations, spending [had to] be significantly reduced." We have held that "[a]n employer's changing rationale for making an adverse employment decision can be evidence of pretext" because "[s]hifting justifications over time calls the credibility of those justifications into question." Cicero v. Borg-Warner Auto., Inc., 280 F.3d 579, 592 (6th Cir. 2002). However, "[t]he extent to which such shifting justifications are probative of pretext depends upon the circumstances of a given case" and the magnitude of the inconsistency. Eades v. Brookdale Senior Living, Inc., No. 08-6549, 2010 WL 3927246, at *5 (6th Cir. Sept. 22, 2010) (unpublished opinion) (citing Chen v. Dow Chem. Co., 580 F.3d 394, 400 n.4 (6th Cir. 2009)); Here, whether the asserted explanation is a "serious financial situation" requiring cost-cutting or a mere desire to eliminate financial inefficiency, the unnecessary expense of the captains' salaries has always been at issue. Thus, the City has consistently justified the changes on the grounds of efficiency.
Relatedly, plaintiffs point to evidence that Godwin's statement that the City was in danger of failing to meet payroll was false. As plaintiffs note, the City's CAO testified that there was actually no danger of failing to meet payroll, and Godwin himself testified that the Department would have had a budget surplus even if the rank had not been abolished. However, the CAO also testified that the City had "organizational financial challenges" at the time, that the City needed to reduce spending to increase its reserve fund, and that "during that time period... all [City] divisions were asked to reduce their budget...." Thus, while the evidence certainly allows the inference that
Godwin, to save face, exaggerated the budgetary pressures that led him to make his decision, plaintiffs have not produced evidence from which a reasonable jury could conclude that illegal motivations more likely explained the elimination of the captain rank. Blair, 505 F.3d at 533 n.15. See Gatch v. Milacron, Inc., 111 F. App'x 785, 791 (6th Cir. 2004) ("[E]ven if the [reduction in force] was not entirely necessary from a business standpoint,... [t]his evidence simply does not permit a finding that... discrimination rather than business judgment motivated [it]...."); see also Schuster v. Lucent Techs., Inc., 327 F.3d 569, 577-78 (7th Cir. 2003) ("Even accepting that [the employer] may have at times over-defended its decision, we believe that its overall account is substantially consistent with that of a company seeking to reduce costs....").
Plaintiffs insisted at oral argument that defendants' cost-saving explanation cannot be believed because the Department conducted a round of merit-based promotions to lieutenant and major shortly after the captain rank was abolished. However, it is undisputed that there was a serious pre-existing shortage of lieutenants and majors before the abolition. While the Department's decision to make these promotions may be further evidence that the Department was not on the brink of insolvency, its choice to incur operationally necessary expenses does not imply that the abolition of the captain rank was not motivated by cost-saving considerations. Plaintiffs' argument is akin to suggesting that an individual's choice to forego dessert with his meal could not have been motivated by weight-loss considerations because he ate something rather than fasting completely.
Accordingly, the district court's grant of summary judgment to defendants with respect to plaintiffs' race-and sex-discrimination claims was proper.
III. Age Discrimination
Under the ADEA, it is unlawful for an employer
(1) to fail or refuse to hire or to discharge any individual or otherwise discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's age; [or]
(2) to limit, segregate, or classify his employees in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual's age....
29 U.S.C. § 623(a). The first clause above has been interpreted as proscribing intentional disparate treatment on the basis of age, Hazen Paper Co. v. Biggins, 507 U.S. 604, 609 (1993), while the second clause has been interpreted as proscribing facially neutral employment practices with a disparate impact based on age, Smith v. City of Jackson, Miss., 544 U.S. 228, 240 (2005). Plaintiffs allege both forms of age discrimination.
"We apply the same analysis to [plaintiffs'] discrimination claims brought under the THRA as to [their] claims brought under... the ADEA." Jones v. Memphis Light, Gas and Water Div., No. 08-6212, 2009 WL 2974888, at *4 (6th Cir. Sept. 17, 2009).
A. Disparate Treatment
A plaintiff may establish disparate treatment in violation of the ADEA by either direct or circumstantial evidence. Geiger v. Tower Auto., 579 F.3d 614, 620 (2009). Plaintiffs argue that the district court erred by finding a lack of direct evidence of age discrimination. Specifically, plaintiffs argue, defendants admitted that "every employee holding the Captain rank had to be over age 40" by virtue of the 30-year service requirement. Appellants' Br. at 51. This, however, is not direct evidence of intent to discriminate based on age.
"Direct evidence of discrimination is that evidence which, if believed, requires the conclusion that unlawful discrimination was at least a motivating factor in the employer's actions." Ibid. (emphasis added); see also Nguyen v. City of Cleveland, 229 F.3d 559, 563 (6th Cir. 2000) (stating that "a facially discriminatory employment policy or a corporate decision maker's express statement of a desire to remove employees in the protected group is direct evidence of discriminatory intent."). The Supreme Court has made clear that "there is no disparate treatment under the ADEA when the factor motivating the employer is some feature other than the employee's age" and that such factors include "an employee's pension status or seniority, that is empirically correlated with age." Hazen Paper, 507 U.S. at 608-09; see also Kentucky Ret. Sys. v. EEOC, 128 S. Ct. 2361, 3270 (2008). Captain status is an age-correlated factor. Plaintiffs' asserted "direct evidence" does not "reguire[] the conclusion" that age, rather than captain status itself, motivated the decision to abolish the rank.
Plaintiffs' disparate-treatment age-discrimination claim must therefore be proved, if at all, using the McDonnell Douglas proof structure. Geiger, 579 F.3d at 622. However, as discussed above, even assuming for the sake of argument that plaintiffs can make out a prima facie case under McDonnell Douglas, defendants have asserted a legitimate non-discriminatory reason, and plaintiffs have not adduced sufficient evidence of pretext. Accordingly, plaintiffs' disparate-treatment age-discrimination claim was properly dismissed.
As we noted in Geiger, the Supreme Court in Gross v. FBL Financial Services, Inc., 129 S.Ct. 2343 (2009), rejected an evidentiary framework that shifts the burden of persuasion to the defendant-employer in ADEA disparate treatment claims, which this circuit had applied to claims based on direct evidence. Geiger, 579 F.3d at 621. However, the Gross Court expressly declined to decide whether the separate McDonnell Douglas burden-shifting framework applies to the ADEA. Geiger, 579 F.3d at 622. Because this circuit has "long found the McDonnell Douglas framework useful in analyzing circumstantial evidence of ADEA claims," and because Gross did not clearly proscribe this practice, we apply it here. Ibid.
B. Disparate Impact
"[W]hen bringing a disparate impact claim [under the ADEA], plaintiffs need not show that a defendant intended to discriminate, but must instead prove that a particular employment practice, although neutral on its face, has produced a significant adverse effect on [older workers]...." Kovacevich v. Kent State Univ., 224 F.3d 806, 830 (6th Cir. 2000). "The plaintiffmust first establish a prima facie case by identifying and challenging a specific [facially neutral] employment practice, and then show an adverse effect by offering statistical evidence of a kind or degree sufficient to show that the practice in question has caused the adverse effect in question." Ibid. (internal quotation marks omitted). The ADEA's disparate-impact coverage is "significantly narrow[er]" than Title VII's, as the ADEA "provides that it shall not be unlawful for an employer 'to take any action [with a disparate impact on older workers]... where the differentiation is based on reasonable factors other than age [("RFOA")]...." Smith, 544 U.S. at 238. "[O]nce a plaintiff has satisfied [the prima facie burden], the burden of persuasion shifts to the employer to show that the practice is supported by a RFOA." Allen v. Highlands Hosp. Corp., 545 F.3d 387, 404 (6th Cir. 2008).
Once again, we assume for the sake of argument that plaintiffs can establish a prima facie case of disparate impact under the ADEA-i.e., that the elimination of the captain rank is a facially neutral employment practice with a disparate impact based on age. Even so, plaintiffs' disparate- impact age-discrimination claim cannot prevail because defendants have met their burden of demonstrating that the practice is supported by an RFOA. Allen, 545 F.3d at 404. The RFOA inquiry is one of reasonableness. See Smith, 544 U.S. at 243 ("Unlike the business necessity test [under Title VII's disparate-impact branch], 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 [under the ADEA] includes no such requirement"). As the district court found, there is no genuine issue of material fact as to the reasonableness of the factors other than age offered by the defendants to explain the disparate impact.
Defendants argue that plaintiffs have not identified a valid "employment practice" because the abolition of the captain rank targeted only a specific subgroup of employees instead of being "applied across the workforce...." Appellants' Br. at 50-51. The district court agreed, although it cited in support only one out-of-circuit case, EEOC v. Allstate Insurance Co., 528 F.3d 1042 (8th Cir. 2008), which was vacated upon the grant of rehearing en banc. The EEOC has filed an amicus brief arguing that the district court's interpretation of Allstate is incorrect. Because resolution of this question is not necessary to the disposition of this case, we take no position on it.
Here, once again, defendants have adduced evidence showing that the employment action was based on the inefficiency of paying the captains more (in some cases, tens of thousands of dollars more) than patrol officers, sergeants, or lieutenants to perform the very same duties those lower-ranked officers performed. We recently held that the "termination of] employees based on seniority to facilitate the hiring of new, less costly employees" qualified as an RFOA. Allen, 545 F.3d at 405. That being the case, demoting employees of a particular seniority status for cost-saving and operational considerations surely qualifies as well. Whether there were more logical or less disruptive ways for the Department to increase its operating efficiency is beside the point. Smith, 544 U.S. at 243.
IV. Residual Equal-Protection Claim
In addition to asserting more traditional equal-protection claims based on their membership in protected classes, which we have already addressed, plaintiffs argue that the abolition of the captain rank fails even rational-basis review under the Equal Protection Clause because defendants' decision to single out the captains for demotion was "wholly arbitrary and irrational," Am. Compl. ¶ 65, and/or "motivated by animus and ill-will," Appellants' Br. at 63.
The Supreme Court has recognized that plaintiffs may assert a claim under the Equal Protection Clause even if they do not claim membership in any class or group, "where [they] allege[] that [they have] been intentionally treated differently from others similarly situated and that there is no rational basis for the difference in treatment." Village of Willowbrook v. Olech, 528 U.S. 562, 564 (2000); see also Engquist v. Oregon Dep't of Ag., 128 S. Ct. 2146, 2149 (2008) (plaintiff "alleg[ed] that she was fired not because she was a member of an identified class (unlike her race, sex, and national origin claims), but simply for 'arbitrary, vindictive, and malicious reasons'"). While such equal-protection claims are generally termed "class-of-one" claims, see Olech, 528 U.S. at 564; Engquist, 128 S. Ct. at 2149, this term is something of a misnomer; the hallmark of such a claim is not the allegation that one individual was singled out, but rather, the allegation of arbitrary or malicious treatment not based on membership in a disfavored class. See Olech, 528 U.S. at 564 n. (noting, despite the Court's characterization of the plaintiff's claim as a "class-of-one" claim, that "the complaint in this case could be read to allege a class of five"); Franks v. Rubitschun, 312 F. App'x 764, 766 n.2 (6th Cir. 2009) ("Although such claims are typically referred to as class-of-one claims, there is no requirement that the challenged government action single out one solitary person.").
There is reason, however, to question whether plaintiffs may assert their residual equal protection claim at all in light of Engquist v. Oregon Department of Agriculture, in which the Court held that "the class-of-one theory of equal protection does not apply in the public employment context." 553 U.S. at 598. We need not decide the limits of Enguist here, however, because plaintiffs' residual equal-protection claim suffers from other fatal deficiencies.
First, "[t]o satisfy [the Equal Protection Clause's] threshold inquiry, [plaintiffs] must allege that [they] and other individuals who were treated differently were similarly situated in all material respects." Taylor Acquisitions, L.L.C. v. City of Taylor, 313 F. App'x 826, 836 (6th Cir. 2009). Plaintiffs attempt to cast in this comparative role the captains in former years who were never demoted; however, prior generations of captains were not subject to Godwin's supervision, and there is no evidence that the Department faced similar logistical and budgetary concerns in the past. See Mitchell v. Toledo Hosp., 964 F.2d 577, 583 (6th Cir. 1992) ("[T]he individuals with whom the plaintiff[s] seek[] to compare [their] treatment must have dealt with the same supervisor[ and] have been subject to the same standards...."). Plaintiffs also suggest that they were similarly situated to probationary police officers, who, like captains, receive salary increases for completing a specified length of service; however, probationary officers are entry-level, non-civil-service employees who are not similar to captains in any other respect.
Furthermore, even if plaintiffs could pass the "similarly situated" hurdle, "governmental action subject to equal protection scrutiny under the rational basis test must be sustained if any conceivable basis rationally supports it." TriHealth, Inc. v. Bd. of Comm'rs, Hamilton County, 430 F.3d 783 (6th Cir. 2005) (citing Fed. Commc'ns Comm'n v. Beach Commc'ns, Inc., 508 U.S. 307, 313-14 (1993)) (emphasis in original). Under rational-basis review, a defendant has "no obligation to produce evidence to sustain the rationality of its action; its choice is presumptively valid and 'may be based on rational speculation unsupported by evidence or empirical data.'" Ibid. (quoting Beach
Commc'ns, 508 U.S. at 315)). As discussed above in the race-, sex-and age-discrimination contexts, defendants have presented a legitimate nondiscriminatory reason for their action.
Plaintiffs argue that the existence of a conceivable legitimate reason is beside the point because the abolition of the captain rank was actually "motivated by animus." Appellants' Br. at 63. However, as the district court observed, while disfavored treatment based on animus alone cannot pass rational-basis review, see Romer v. Evans, 517 U.S. 620, 632 (1996) (striking down state action where it "seem[ed] inexplicable by anything but animus toward the class it affects"); Stemler v. City of Florence, 126 F.3d 856, 873-74 (6th Cir. 1997) (stating that "action based on... animus alone violates the Equal Protection Clause"), the absence of rational basis can be shown by "negativing every conceivable basis which might support the government action or by demonstrating that the challenged government action was motivated by animus or ill-will." Warren v. City of Athens, 411 F.3d 697, 711 (6th Cir. 2005) (internal quotation marks and brackets omitted). This is far from such a case. Furthermore, upon closer examination, Godwin's so-called "animus" against captains boils down to indelicately articulated dissatisfaction with the tenure-based promotional system and the value provided by holders of the captain rank. While his alleged comments were crude, they support, rather than undermine, defendants' asserted explanation for the elimination of the rank.
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V. Tortious Interference Against Godwin
Lastly, plaintiffs allege that Godwin, in his individual capacity, "intended to [and did] cause the breach of the contract and/or business relationship between the City of Memphis... and plaintiffs" in violation of Tennessee law. Am. Compl. ¶ 80. Tennessee recognizes a cause of action for tortious interference with another person's at-will employment. Forrester v. Stockstill, 869 S.W.2d 328, 330 (Tenn. 1994). However, "a party to a contract cannot be liable for tortious interference with that contract." Cambio Health Solutions, LLC v. Reardon, 213 S.W.3d 785, 789 (Tenn. 2006). And, as the Tennessee Supreme Court has held,
when an... employee of a corporation acts within the general range of his authority, and his actions are substantially motivated by an intent to further the interest of the corporation, in claims of intentional interference with employment, the action of the... employee is considered to be the action of the corporation and is entitled to the same immunity from liability.
Forrester, 869 S.W.2d at 334-35. In this case, as in Forrester, despite the evidence of Godwin's rude remarks toward captains,
There is no evidence in the record that [Godwin] had any relationship with [plaintiffs] except through their connection with [the Department]. There is no evidence that [Godwin] harbored any malice, ill will, or other attitude or emotion towards [plaintiffs]
except within the context of [the Department]. There is no evidence that [Godwin] would benefit personally from [plaintiffs' demotion]. Most importantly, there is no evidence that [Godwin was] acting for any purpose other than [his] perceived best interest for [the Department].
Id. at 334 (emphasis added). Accordingly, Godwin is immune from personal liability for inducing plaintiffs' demotions, and the district court correctly so held.
CONCLUSION
For the foregoing reasons, the judgment of the district court is AFFIRMED.