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Raymond v. Spirit Aerosystems Holdings, Inc.

United States District Court, D. Kansas

December 17, 2018

DONETTA RAYMOND, et al., Plaintiffs,



         This matter is before the court on the parties' cross-motions for partial summary judgment. (Docs. 338, 342.) The motions are fully briefed and are ripe for decision. (Docs. 341, 343, 356, 358, 366, 368.) For the reasons stated herein, Plaintiffs' Motion for Partial Summary Judgment (Doc. 338) is DENIED and Defendants'[1] Motion for Partial Summary Judgment (Doc. 342) is GRANTED IN PART and DENIED IN PART.

         I. Background

         Plaintiffs are former employees of Spirit. They filed this collective action on behalf of themselves and others under the Age Discrimination in Employment Act, 29 U.S.C. § 621 et seq. (“ADEA”), [2] alleging that Spirit unlawfully discriminated against them when it terminated their employment in a reduction-in-force (RIF), and later when it did not hire them for new job openings. The Plaintiffs also bring individual ADEA claims, and some assert claims under the Americans with Disabilities Act, 42 U.S.C. § 12101 et seq. (“ADA”) and/or the Family Medical Leave Act, 29 U.S.C. § 2601 et seq. (“FMLA”). (Doc. 1 at 2-3.)

         During 2013, Spirit engaged in a number of Human Resource (HR) actions to reduce its overhead, including offering employees early retirement incentives and laying off workers. Such actions were taken at Spirit's manufacturing facilities in Tulsa and McAlester, Oklahoma; in Kinston, North Carolina; and in Wichita, Kansas.

         In July 2013, Spirit implemented layoffs at its Wichita facility. There were 271 employees selected for layoff, including 221 represented by the Society of Professional Engineering Employees in Aerospace (SPEEA). Spirit offered each laid-off employee a severance package which included a lump-sum payment in exchange for a waiver of claims against Spirit. All but 11 of the employees impacted by the Wichita layoffs executed a release agreement containing a waiver.

         In 2016, 24 of the SPEEA-represented employees filed this lawsuit. They were later joined by 47 opt-in Plaintiffs. Of the 71 total Plaintiffs, 66 signed a release agreement. The Plaintiffs who signed the releases argue their waivers of ADEA claims were not knowing and voluntary under the standards of the Older Workers Benefit Protection Act (OWBPA), 29 U.S.C. § 626. The parties agreed to conduct the litigation in two phases, with the first phase to address the validity of the ADEA waivers. The parties have now filed cross-motions for summary judgment addressing that issue.

         II. Uncontroverted facts

         Plaintiffs' 53-page statement of facts (Doc. 341) contains a multitude of assertions that are not supported by the materials cited in support, or that constitute argument. Spirit disputes almost all of Plaintiff's allegations (and then some) in a 203-page responsive statement. (Doc. 358-1.) Plaintiffs' responsive statement to Spirit's own statement of facts, meanwhile, runs 100 pages. (Doc. 356.) The briefs, responses, and replies supporting the motions total about 400 pages, with over 150 footnotes, and the materials cited in support exceed 5, 000 pages. The parties' factual presentations are, in the court's view, highly argumentative and excessively contentious, making it difficult to compile a statement of facts - many of which should have been undisputed.

         The parties' difficulties likely stem in part from the governing law, which employs vague standards making virtually every aspect of an employer's business operations a consideration in deciding ADEA waiver issues. See e.g., 29 C.F.R. § 1625.22(f)(3) (employer's OWBPA disclosure obligation is based on “its organizational structure and decision-making process” and must be determined “on a case-by-case basis.”) With that background in mind, the court has attempted to compile a comprehensible statement of facts. The following statement excludes any of the parties' assertions that are immaterial or unsupported by the record cited.[3]

         The Named Plaintiffs are 24 former Wichita-based salaried, non-management employees of Spirit. They were laid off by Spirit effective August 8, 2013. Each of them was represented by SPEEA. The Named Plaintiffs seek to represent 47 SPEEA-represented opt-in Plaintiffs who have filed consent forms to participate in this action. (Doc. 343 at 14.)

         Spirit is an aerospace manufacturer. In 2013, it had domestic manufacturing facilities in Wichita, Kansas; Chanute, Kansas; Tulsa, Oklahoma; McAlester, Oklahoma; and Kinston, North Carolina. It also operates facilities in other countries. Spirit's world headquarters is in Wichita. Its Wichita facility manufactures and assembles fuselage and propulsion (underwing) sections, primarily for Boeing aircraft. Wichita also houses some salaried overhead functions, such as HR, information technology, accounting, public relations, supply chain management, and engineering. (Id.) The majority of Spirit's employees in 2012 worked at its Wichita site.

         SPEEA represents two separate bargaining units of non-management employees in Wichita: the Wichita Engineering Unit (WEU) and the Wichita Technical and Professional Unit (WTPU). Each of these units has its own collective bargaining agreement (CBA) with Spirit. SPEEA does not represent employees at other Spirit facilities. (Id.)

         Spirit's Tulsa facility produces leading wing edges for Boeing aircraft and (back in 2013) fully-assembled wings for Gulfstream aircraft. (Id.) The hourly workforce in Tulsa is represented by the United Auto Workers (UAW). The McAlester facility fabricates small parts of wing components, primarily for assembly at the Tulsa facility. Its hourly workers are represented by a separate bargaining unit of the UAW. The Kinston, North Carolina, facility produces Airbus fuselages and (in 2013) some Gulfstream parts. Its management and salaried employees are not represented. (Id. at 15.) Each of these facilities maintains some of its own overhead support staff.

         Some of Spirit's programs span multiple locations. For example, Spirit's 787 and 737 programs have employees and operations in multiple locations across the company. But the employees performing work at one location on a program do not perform the same work as employees performing work on that program at other locations.

         In late 2012, Spirit was facing significant challenges. In October 2012, it announced a $590 million pre-tax charge for extraordinary expenses in the third quarter. It reported a net income loss of $134 million for the third quarter, and ended the year with net income down 82 percent. Spirit's leadership decided the company needed to be more competitive by reducing overhead costs.

         In October of 2012, an HR report indicated the company needed to aggressively manage overhead and salaried workers by increasing “performance separations” - i.e. firing more workers for poor performance. (Doc. 351-6 at 3.) It also noted there were 670 employees across the company over the age of 62 and suggested the company could replace “long service/high cost” employees with new hires by offering a voluntary separation package. (Id. at 4.) The report observed the company's total headcount was 16, 301, which was 636 “heads over budget” for the year 2012 (based on an operating budget of 15, 665 positions), with 622 open requisitions. (Id. at 5.) Revenue-per-employee was one of the metrics Spirit used to track its performance. Spirit wanted a more favorable ratio in that metric and in overall profitability, in part by reducing the employee “headcount” of the company.[4]

         As part of an effort to reduce overhead, Spirit executives concluded the company needed to reduce the size of management and salaried staff. Subsequently, over the course of 2013, Spirit devised and implemented eleven HR actions that were designed to reduce overhead. The actions included redesigning fringe benefits, eliminating non-essential costs, restructuring work schedules, restricting overtime, improving worker productivity through performance management, offering early retirement incentives, and conducting layoffs. The June 2013 Wichita layoffs that are the focus of this suit were the result of one of the HR actions aimed at reducing overhead. (Doc. 343 at 16-17.) The same core members of Spirit's senior leadership team were involved in and approved the decisions to go forward with each of the 2013 HR actions discussed herein. These members included Vice President Justin Welner, Senior Vice President and Chief Administrative Officer Samantha Marnick, Director of Human Resources Jason Hohl, and Senior Vice President over Spirit's fuselage-segment, David Coleal. (Doc. 341 at 21-22; Doc. 358-1 at 39.)

         In late 2012, Spirit reorganized its HR department so that HR employees at each of its sites reported to HR managers in Wichita instead of reporting to local facility leaders. In early 2013, Spirit's HR leaders worked with managers and HR personnel at all Spirit facilities to reform the performance management (PM) process and make it more uniform. In its annual PM reviews, Spirit managers rated employees by category - from worst to best - as: Unacceptable; Meets Some [expectations]; Meets; Exceeds; or Exceptional. Spirit VP Welner testified that Spirit's PM ratings had historically been “skewed right, ” with employees highly rated even though the company was underperforming. (Doc. 341-1 at 23.) Welner implemented a “rigorous calibration process” to make sure managers were rating employees consistently throughout the company. (Id. at 24.) Managers were instructed to rate employees in line with a “bell curve” distribution of 15 percent of employees in a top tier, 70 percent in the middle, and 15 percent in a lower tier. As a result, many Spirit employees received lower performance ratings for 2012 than they had in the past. The 2012 PM review process was completed in early 2013. Employees hired after December 1, 2012, were generally excluded from this process, as they had not worked long enough for a complete performance review.

         Spirit's executive leadership was of the view, and communicated to its separate facility directors, that healthy companies regularly terminate ten to fifteen percent of their lowest performing employees, which was far more than Spirit had traditionally terminated. Spirit's executive leadership pushed facility managers to reduce overhead by eliminating a significant percentage of the lowest-rated employees at their facilities. As part of that process, Spirit HR facilitated the “calibration” exercises reforming PM reviews at each facility and the PM ratings for each group had to be approved by senior-level officers.

         Wichita performance terminations March 2013. Under the SPEEA CBAs in place in Wichita, Spirit could only terminate SPEEA-represented employees for “just cause.” In March 2013, Wichita HR and managers, as a result of Spirit's directives to reform the PM process and to reduce overhead costs, identified and terminated 50 Wichita management and salaried employees with Unacceptable 2012 PM ratings whose performance supported (in management's view) an immediate, just cause termination. Employees hired on or after December 1, 2012, were excluded from consideration, as they did not have a sufficient record of performance. Wichita managers also placed other employees with Unacceptable or Meets Some PM ratings on performance plans. Between May 2 and July 12, 2013, Spirit terminated 17 of these other employees for not sufficiently improving their performance. Spirit offered all 67 Wichita employees who were terminated for performance issues a severance payment in exchange for a release of claims and an agreement that the employee would not be eligible for reemployment with Spirit. None of the Plaintiffs were terminated in the March 2013 Wichita performance terminations.

         The release agreements for the 50 employees terminated in March 2013 included an OWBPA Disclosure List (“Disclosure List”) identifying the employees selected for termination. The 17 employees later terminated for performance reasons received updated disclosure lists of the employees to whom the severance was offered. The OWBPA Disclosure identified the decisional unit from which Spirit selected the persons for termination and severance benefits as: “All salaried employees (excluding executives) hired before December 1, 2012, who actively performed work in 2012 and who worked at Spirit's Wichita facility (or whose performance ratings are assigned by managers who work at the Wichita facility) as of March 11, 2013.” (Doc. 341-53 at 2.) The Disclosure stated that job performance was the factor Spirit considered to determine who would be selected for termination. It stated that all employees within the decisional unit who are terminated for performance from March 11, 2013 to date received the offer of severance benefits. (Id.) Wichita managers and HR personnel who considered and selected employees for performance termination did not consider any employees outside of Wichita, and no jobs at other locations were reduced or saved as a result of these Wichita terminations.

         Tulsa layoffs and retirements March 2013.

         By the end of 2012, Spirit considered its two Oklahoma facilities to be about 700 employees “over budget” based on projected work load and revenue per employee. The surplus was primarily in the Tulsa facility. In January 2013, Tulsa management and HR personnel decided upon a layoff of Tulsa management and salaried employees to occur in March of 2013. Tulsa site managers and HR assigned Tulsa employees a composite score that combined employees' year-end 2012 PM performance ratings with their managers' assessment of their knowledge, skills, ability, and versatility (“KSA-Versa”). Tulsa managers grouped employees into “comparator groups” based on similarity of job positions and ranked employees within each group. To the extent Tulsa management identified appropriate areas for reduction in headcount, the lowest ranked Tulsa employees were selected for a March layoff. On March 8, 2013, Spirit laid off 55 employees in Tulsa. Unlike Wichita, these were not for-cause terminations for poor performance. Although the impetus to reduce overhead and positions came from Spirit's executive leadership and the plan for doing so was subject to their approval, the process and criteria for the Tulsa layoff was created by Tulsa leadership and Tulsa-based HR employees independent of the reductions in Wichita. No. employees from Wichita were considered in this process, and no Wichita jobs were reduced or saved from reduction because of the Tulsa layoffs. Spirit offered each employee selected for layoffs in Tulsa a severance package in exchange for a release of claims.

         In March of 2013, Tulsa management also offered a voluntary retirement incentive to certain retirement-eligible UAW-represented hourly employees, instead of calling for a layoff among that portion of the Tulsa employee population.

         Kinston performance terminations March 2013.

         In March 2013, Kinston management and Kinston HR personnel identified and terminated three management and salaried Kinston employees whose performance ratings warranted (in management's view) their termination. One other Kinston employee who was on a performance plan was also terminated in May 2013. Spirit presented each of the four terminated Kinston employees an offer of severance in exchange for a release of claims. No. Wichita employees were considered during this process and no jobs in Wichita were reduced or saved from reduction because of these terminations.

         The Spirit employees terminated in March of 2013 in Tulsa, Wichita, and Kinston all received severance payments determined under the same severance formula. Spirit instructed HR managers at the various facilities that the 2012 PM review process should be closed out by mid-April of 2013. As part of this process, managers met with employees to communicate their 2012 PM ratings. Employees who were not terminated but whose performance needed improvement were placed on performance plans. Some were later terminated for failing to improve performance. A number of Spirit employees (63) voluntarily resigned after being notified of performance issues. Spirit characterized such terminations and resignations as “performance exits” in its tracking of headcount across the enterprise.

         In an email dated May 20, 2013, Welner expressed to Marnick that the number of performance terminations was not up to Board of Directors' expectations and that other HR actions needed to be taken. He wrote that HR would put together plans to expedite headcount reductions in Tulsa, conduct a retention exercise for SPEEA-represented employees in Wichita (in anticipation of a layoff), and identify managers who were “not up to leading the charge” on performance terminations. (Doc. 351-28.)

         Wichita layoffs July 25, 2013.

         Jeff Turner was Spirit's CEO from the company's founding in 2005 until April 2013, when he retired. Spirit first started reducing headcount in early 2013 at Turner's direction. Turner was openly opposed to layoffs in Wichita. Instead, Spirit began reducing headcount in Wichita through attrition by implementing a hiring freeze for most management and salaried positions, with some exceptions for critical-skill positions. This meant Spirit would not backfill positions in Wichita as they were vacated. Turner also insisted the company should attempt to “manage its underperformers” (i.e. remove employees not meeting expectations) before considering layoffs in Wichita. Turner's policy in that regard resulted in the March 2013 performance terminations in Wichita. On April 6, 2013, Larry Lawson became Spirit's CEO and President. Lawson communicated to Welner that Spirit needed to more aggressively reduce headcount in Wichita and directed him to make preparations for Wichita layoffs.

         During May and June 2013, Wichita executives and HR staff discussed a Wichita layoff. The CBAs for SPEEA-represented employees included layoff provisions that required Spirit to retain employees with the best performance or as warranted by business need in each job classification. (Doc. 343-2 at 8.) The CBAs thus typically required Spirit to choose the lowest-rated employees in each classification when selecting employees for a layoff.

         The CBAs allowed Spirit to conduct a retention exercise in advance of a layoff. (Doc. 343 at 19.) Under that process, Spirit assigned retention ratings within each retention group. The CBAs mandated that Spirit assign each represented employee a retention-rating Category of A, B, or C, with A representing employees in the top 70% of each classification, B representing the next 20%, and C representing employees rated in the lowest 10% of each classification. WEU employees were grouped by job classification and skill code; WTPU employees were grouped according to job classification and exempt/non-exempt status. (Id. at 18.) Within each retention rating group, managers rated each employee based on performance, versatility, and criticality.

         In preparation for layoffs, Spirit conducted a retention rating exercise in Wichita in June of 2013, led by Gina Boswell from Wichita HR. Under her direction, Wichita managers within each retention group assigned a retention rating to each SPEEA-represented employee using the CBAs' mandatory 70/20/10 distribution. (Id. at 19.) Managers were directed to rate employees using the following criteria: the 2012 PM rating and 2013 performance to date; versatility (including critical thinking skills, transferable skill sets, and flexibility); and criticality (including skills needed for critical functions and future requirements). (Doc. 339-33 at 6.)

         Spirit HR cautioned managers they should not fill Category C with newer employees, that newer employees should be evaluated based on their progress to date and potential, and that company service should be used as a “tie breaker” rather than the primary basis for retention. (Id. at 7.) HR did not want managers to “take the easy way out” by filling Category C with newer workers; it wanted them to truly identify bottom-level performers. Spirit HR “designated” most of the SPEEA-represented employees who were assigned Category C retention ratings, meaning they were not eligible for a seniority “bump up”[5] and did not have recall rights in the event of a RIF. By operation of the CBAs, SPEEA-represented employees hired on or after May 21, 2013, automatically received a C retention rating. (Doc. 343 at 19.)

         In July 2013, Spirit's executive leadership made the decision to lay off management and salaried employees in Wichita. Spirit HR did not assign Wichita managers a mandatory reduction target, but indicated they should be looking at a reduction of 10-15 percent of reporting employees. (Id. at 20.) The uncontroverted facts show that throughout 2013, Spirit executives pushed facility site Directors and HR representatives to reduce employee headcount by terminating the lowest rated employees for cause, by offering early retirement incentives, and by enacting layoffs. Early in 2013, Spirit was projecting a need to reduce overall employment to about 16, 100 employees. A mid-year assessment resulted in a commitment to further reduce overall employment to 15, 600 employees. The HR actions in 2013, including the July layoffs in Wichita, resulted from directives by Spirit executives to facility Directors and HR personnel to reduce headcount. The various HR actions in 2013 resulted in an overall headcount of 16, 023 employees at the end of 2013.

         The July 2013 Wichita layoffs did not cover all employees at the Wichita facility. The Wichita managers and Wichita HR considered the following portion of the workforce for layoffs: all managerial employees (excluding executives) and all salaried employees, both non-represented and represented (but excluding non-management employees in job or skill management codes 63Y-Stress Engineering; 64B-Systems Engineering; 643-Thermal Analysis; DFKE-Industrial Engineering; DFKK-Manufacturing Engineering; HAAB-Procurement Analyst; HADP-Procurement Agent; JACZ-FAA Designee; UANWU32-Intern-Student Engineer; and UAMRU11-Intern-Business.) (Id.) Employees considered for layoff included those hired after December 1, 2012.

         Managers of SPEEA-represented employees had already identified the bottom ten percent of each retention group through the June 2013 retention exercise. SPEEA-represented workers were selected for layoff based on their retention rankings, which in turn were based on performance-related factors. Wichita managers and HR ultimately selected 221 C-retention-rated employees for layoff. During June and July 2013, managers of non-represented employees assessed their employees based on several factors, including performance, versatility, and criticality; redundant work statements; consolidation of roles; and flattening of the management structure. (Doc. 343 at 21.) They selected 50 non-represented employees for layoff.

         During the process of selecting employees for layoff, Spirit considered whether new hires within the covered group would be laid off. Spirit was concerned that managers would default to selecting new employees for layoff without regard to other selection factors, and that laying off newly-hired employees would damage relations with recruiting sources and waste resources already spent on new hires. Spirit HR decided that any employee in the covered group hired on or after May 21, 2013 - within approximately the last 60 days - would not be selected for layoff. (Id.) This decision impacted 18 employees in Wichita, 11 of whom were under the age of 40. (Doc. 343-2 at 13.) The same policy was applied to July layoffs at Spirit's Oklahoma facilities.

         Ultimately, 271 management and salaried employees in Wichita were selected for layoff, including 221 represented by SPEEA. Wichita managers and Wichita HR personnel decided which employees in Wichita would be laid off and which ones would not be. They did not consider, evaluate, or compare employees at other Spirit sites as part of their decision-making process and no jobs at other locations were reduced or saved from reduction because of the Wichita layoffs. Employee performance was the predominant factor in selecting persons for the layoff. Individual managers' ratings ...

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