Oil Rig Worker’s Age Discrimination Claim Dismissed

By Jonathan E. O’Connell, SHRM-SCP October 1, 2019
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Oil Rig Worker’s Age Discrimination Claim Dismissed

​The 5th U.S. Circuit Court of Appeals decided that an employee's age-discrimination claim was appropriately dismissed, citing a lack of evidence that an oil rig company's nondiscriminatory reason for firing an employee was unbelievable.

The plaintiff began his employment with Transocean Offshore Drilling Inc. in 2001 on an offshore oil-drilling rig. During his employment, he earned a number of promotions and pay increases, eventually reaching the position of toolpusher, a supervisory role aboard drilling rigs.

Between 2014 and 2018, the oil and gas industry suffered a significant downturn. As a result, Transocean reduced its offshore drilling fleet by 44 rigs and ultimately laid off 7,320 of its employees. The company's HR department implemented a system for executing the reduction in force (RIF), which was designed to identify and retain the company's best performers. Under its system, named the "high-grading process," the company judged employees by such factors as performance and potential.

[SHRM members-only toolkit: How to Conduct a Layoff or Reduction in Force]

The scores associated with these parameters were then compiled into an overall composite score. Employees achieving a higher overall score were more likely to keep their jobs, while lower scorers were more likely to be separated as part of the RIF. In April 2015, Transocean terminated the plaintiff's employment as part of its layoffs. He was 59 years old at the time. To replace the plaintiff, the company retained and reassigned a 49-year-old employee, who received higher scores under the high-grading process.

The plaintiff sued the company in the U.S. District Court for the Southern District of Mississippi under the Age Discrimination in Employment Act (ADEA). The company filed a motion for summary judgment seeking dismissal of the plaintiff's claim before trial. The district court concluded that the plaintiff failed to present enough evidence to show that the company's reasons for ending his employment were unworthy of belief, and so it dismissed his case.

On appeal, the plaintiff made several allegations that he asserted supported his position that the company's justification for ending his employment was untrue. First, the plaintiff noted a statement allegedly made by a manager who told the plaintiff that he "had nothing to worry about" because he was eligible to get his "pension without receiving a financial penalty from the IRS." Examining prior precedent, the 5th Circuit rejected the plaintiff's contention that the statement constituted evidence of age discrimination because the statement "did not reflect any discriminatory animus." Moreover, the court reasoned, the manager did not have any influence over the decision to end the plaintiff's employment.

Next, the plaintiff argued that inconsistent evidence in the record supported his case. Specifically, on a chart showing all the toolpushers who were laid off and retained, the plaintiff received a higher performance score than his replacement. In response, Transocean explained that while the plaintiff's score on the chart reflected only one of his assessment parameters (i.e., performance), his replacement's score set forth his overall composite ranking for all the factors. In other words, plaintiff's score was incomplete.

The court reasoned that the company's explanation was reasonable, particularly given that at the time, Transocean was in the process of reducing its force by nearly 1,000 employees in an expeditious manner. Ultimately, the court concluded that the plaintiff did "not give any reasons to doubt Transocean's explanation for the discrepancy."

Finally, in affirming the lower court's decision, the court noted two additional pragmatic factors that weighed in favor of dismissal. First, two of the three individuals responsible for ranking and ending the plaintiff's employment were in their 50s, making age discrimination "less likely," the court stated. Second, in the course of the RIF, the company terminated a number of employees who were younger and more qualified than the plaintiff. The court noted its prior holdings, standing for the proposition that age discrimination is less likely when the employer retains other older employees and lays off younger ones.

McMichael v. Transocean Offshore Deepwater Drilling Inc., 5th Cir., No. 19-60011 (Aug. 13, 2019).

Professional Pointer: During reductions in force, employers can help defend themselves against discrimination claims by keeping copious records documenting the legitimate, nondiscriminatory reasons underlying the decision-making process. Employers contemplating large-scale reductions in force should also be aware of the federal Workers Adjustment and Retraining Notification (WARN) Act, as well as so-called state "mini-WARN" acts that may apply.

Jonathan E. O'Connell, SHRM-SCP, is an attorney with O'Connell Law PLLC in Falls Church, Va. 

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