Shifting Reasons For Employee’s Termination May Lay Grounds for Discrimination Claim

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“Shifting Reasons” For Employee’s Termination May Lay Grounds For Discrimination Claim: Vélez v. Thermo King, 585 F.3d 441 (1st Cir. 2009)

In Vélez v. Thermo King, the United States Court of Appeals for the First Circuit reversed the United States District Court for the District of Puerto Rico’s award of summary judgment against a plaintiff in an age discrimination lawsuit. The First Circuit found that an employer’s “shifting explanations” for the plaintiff’s termination, together with other evidence, was sufficient to raise a triable issue of fact on the grounds of pretext. Thermo King had fired the plaintiff after the company’s private investigator alleged that he (plaintiff) had stolen company property and sold it. But because the company failed to articulate its reason for the firing at the outset and then offered “shifting explanations” as the lawsuit advanced, a three-judge First Circuit panel ruled that there were triable issues on the question of pretext. 

José Vélez had worked for Thermo King for 24 years when he was fired at the age of fifty-six. At the time of his discharge, Vélez worked as a Tool Crib Attendant for Thermo King, in charge of maintaining, dispatching, and safeguarding the company’s tools and maintenance materials. In September 2002, Vélez reported that an expensive chipping hammer was missing. Thermo King hired private investigators to conduct an internal investigation into the disappearance of the chipping hammer and other irregularities with respect to its tools and materials. The investigation revealed that several employees had taken company tools and re-sold them for their personal gain. Vélez denied doing so, although he admitted to having received, and occasionally selling, small gifts from Thermo King’s suppliers. Vélez was fired two weeks after his interview with Thermo King’s human resources director. At the time, Thermo King did not give him a reason for his termination. After Vélez filed an administrative complaint, the company’s human resources director responded with a claim that Vélez had been terminated because he had accepted small gifts from Thermo King suppliers. 

When Vélez later filed suit in the District Court, Thermo King alleged that Vélez had received gifts, favors, services, gratuities, and products from Thermo King’s suppliers and vendors without authorization, in violation of company policy. In addition, Thermo King asserted for the first time that Vélez was fired because he had sold Thermo King’s property to other employees and admitted to Thermo King that he sold items received from suppliers and vendors. The District Court granted summary judgment for Thermo King in January 2008. Vélez appealed.

In awarding Thermo King summary judgment, the District Court judge had determined that Vélez could not raise a genuine issue of material fact as to whether Thermo King’s stated reasons for firing him were a pretext for age discrimination. The First Circuit disagreed, finding that there were genuine issues of material fact relating to Thermo King’s stated reason for firing Vélez. Judge Kermit V. Lipez wrote for the unanimous panel. “Thermo King did not initially provide Vélez with any reason for firing him,” he wrote. “One month later, [Thermo King told] the [Equal Employment Opportunity Commission] that Vélez had been fired for violating the company’s policy on receiving gifts from suppliers. It was not until over a year later that Thermo King, responding to this lawsuit, first said that Vélez had been fired for stealing and selling company property.” “The fact that the employer gave different reasons at different times for its action surely supports a finding that the reason it ultimately settled on was fabricated,” the First Circuit concluded. Moreover, those shifting explanations became more suspicious when considered along with Thermo King’s ambiguous company policy about gifts from suppliers and the company’s disparate response to similar conduct by employees other than Vélez. “[I]n light of the shifting explanations given for Vélez’s dismissal, the inescapable ambiguity about whether the [company policy] even precludes Vélez’s admitted behavior in accepting and selling the small value gifts adds to the suspicion that the company’s reliance on the policy may be pretextual.”

Judge Lipez also stressed that Vélez’s evidence of disparate treatment was unusually strong. Vélez showed that at least three younger Thermo King employees were not fired despite their complicity in the theft and/or sale of company property. The First Circuit concluded that, based on the evidence in this case, a jury could find that disparate treatment existed, exposing the pretextual nature of Thermo King’s proffered explanation for firing Vélez and revealing that Thermo King’s true motivation was age discrimination.

The Vélez ruling cautions that an employer must be complete and consistent in the reasons it gives to discharged employees, regulators, and in court filings.