Investigatory Errors Ruled Insufficient to Establish Pretext for ADEA Claim

​The 10th U.S. Circuit Court of Appeals recently held that an employer's flawed investigation alone did not establish pretext for unlawful age discrimination.

The plaintiff worked as vice president and managing director of private wealth management at a financial services company in Denver, managing a team of wealth managers and private bankers. The plaintiff violated the company's policy by giving an employee a personal loan and commission credits for sales in which he did not participate.

The plaintiff also prevented another employee from moving a transaction to help meet sales goals, which would have been "sandbagging" and would have violated company policy. The employee who the plaintiff stopped from sandbagging then complained about the plaintiff's violations of company policy.

The company launched an internal investigation and interviewed 11 people. The internal investigator concluded that the allegations against the plaintiff were substantiated. A separate misconduct disciplinary committee voted to terminate the plaintiff's employment. The disciplinary committee members were not acquainted with the plaintiff and did not know his age.

A year after his termination, the plaintiff filed a charge of age discrimination with the Equal Employment Opportunity Commission and received a right to sue letter. He then brought a claim in federal court alleging discrimination in violation of the Age Discrimination in Employment Act (ADEA).

At issue on appeal was the district court's holding that the plaintiff did not sustain his burden of producing evidence that the company's reason for terminating his employment was pretext for age discrimination.

The plaintiff argued that:

• The company conducted a sham investigation, which established pretext.
• The company's termination decision was a rubber stamp ratifying the termination recommendation of the investigator without any independent analysis.
• The investigation was tainted because the investigator knew the plaintiff's supervisor wanted to terminate the plaintiff's employment.
• The company failed to follow its own policies when it did not investigate the plaintiff's claims that the allegations made against him were in retaliation for him preventing an employee from sandbagging.

The district court noted that the plaintiff's allegations of age discrimination were conclusory and unsupported. It found the plaintiff had failed to present evidence that there was any age-based bias or knowledge of his age by those who decided to terminate his employment.

With respect to the pretext prong, the district court disagreed with the plaintiff's contention that the company had performed a sham investigation with a predetermined outcome. In doing so, the district court reviewed the investigatory steps taken by the internal investigator and found the interviews substantiated the allegation that the plaintiff was adding an employee onto sales he was not involved in so that the employee would receive a commission.

The 10th Circuit held that imperfections in the investigation were not sufficient, on their own, to support a finding of pretext, and the plaintiff had not introduced any other evidence to support such a finding.

Specifically, the appeals court reviewed the plaintiff's nine challenges to the investigation and found there was no evidentiary basis to assume the additional investigatory steps the plaintiff believed the investigator should have taken would have provided evidence that the plaintiff had not violated company policy. The court also found it was not apparent that the company had acted contrary to its written policies when it did not investigate the plaintiff's allegation of retaliation arising from him preventing the complaining employee from sandbagging.

Markley v. U.S. Bank National Association d/b/a US Bank, 10th Cir., No. 21-1240 (Feb. 8, 2023).

Maria Cáceres-Boneau is an attorney with Duane Morris LLP in New York City.