Khalaf v. Ford Motor Co.

973 F.3d 469

Faisal G. KHALAF, Ph.D. Plaintiff-Appellant/Cross-Appellee,

v.FORD MOTOR COMPANY; Bennie Fowler ; Jay Zhou, Defendants-Appellees/Cross-Appellants.

Nos. 19-1435/1468

United States Court of Appeals, Sixth Circuit.

Argued: May 6, 2020

Decided and Filed: August 31, 2020

Rehearing En Banc Denied September 30, 2020

ARGUED: Sarah E. Harrington, GOLDSTEIN & RUSSELL, P.C., Bethesda, Maryland, for Appellant/Cross-Appellee. Thomas G. Hungar, GIBSON, DUNN & CRUTCHER LLP, Washington, D.C., for Appellees/Cross-Appellants. ON BRIEF: Sarah E. Harrington, GOLDSTEIN & RUSSELL, P.C., Bethesda, Maryland, Carol A. Laughbaum, Raymond J. Sterling, STERLING ATTORNEYS AT LAW, Bloomfield Hills, Michigan, for Appellant/Cross-Appellee. Thomas G. Hungar, Jacob T. Spencer, GIBSON, DUNN & CRUTCHER LLP, Washington, D.C., Elizabeth P. Hardy, Thomas J. Davis, KIENBAUM, HARDY, VIVIANO, PELTON & FORREST, Birmingham, Michigan, for Appellees/Cross-Appellants.

Before: GUY, THAPAR, and BUSH, Circuit Judges.

JOHN K. BUSH, Circuit Judge.

This appeal involves claims of national origin discrimination in violation of Title VII, 42 U.S.C. § 2000e et seq. , and Michigan's Elliott-Larsen Civil Rights Act (ELCRA), Mich. Comp. Laws 37.2101 et seq. , and racial discrimination and retaliation in violation of 42 U.S.C. § 1981. The claims were brought by Faisal G. Khalaf, Ph.D., who is of Lebanese descent, against Ford Motor Company, his former employer, and Bennie Fowler and Jay Zhou, his former supervisors at Ford. Specifically, Dr. Khalaf contends that, he was subjected to a hostile work environment because of his race or national origin, and that defendants illegally retaliated against him, after he engaged in protected activities, by demoting him, placing him on a "Performance Enhancement Plan" (PEP), and ultimately terminating his employment.

The jury found that (1) Dr. Khalaf was neither demoted nor terminated by Ford because of his race or national origin; (2) neither Ford as a corporate entity nor Zhou subjected him to a hostile work environment, but Dr. Khalaf's subordinates at Ford had done so (based on national origin or race), and so had Fowler (based on national origin, but not race); and (3) Dr. Khalaf was subjected to retaliatory demotion by Ford and Fowler, retaliatory placement on a PEP by Zhou, and retaliatory termination by Ford alone, but was not subjected to retaliatory placement on a PEP by Fowler or Ford or retaliatory termination by Fowler or Zhou.

For the collective actions of all defendants, the jury awarded Dr. Khalaf $1.7 million in pension and retirement losses and $100,000 in emotional-distress damages. For the actions of Ford only, the jury awarded Dr. Khalaf $15 million in punitive damages. The district court granted Ford's motion for remittitur of punitive damages but denied all of defendants’ other post-verdict motions, including motions for judgment as a matter of law under Federal Rule of Civil Procedure 50(b). As to remittitur, the district court determined, in light of all of the evidence, that the exemplary damages imposed on Ford were "so excessive as to shock the conscience" and violated due process. Therefore, the court reduced the punitive damages award to $300,000.

For the reasons outlined below, we hold that the district court erred in denying defendants’ motions for judgment as a matter of law. Accordingly, we REVERSE and direct the district court to enter judgment in favor of defendants. Based on this holding, we need not address remittitur.

I. BACKGROUND

A. Dr. Khalaf's Employment at Ford

In 1999, Ford hired Dr. Khalaf as a full-time non-management process engineer. R.134, 3.12. Tr., PageID 5655. During much of his career at Ford, Dr. Khalaf was a technical specialist responsible for working on projects involving Six Sigma methodology.¹ Id. at PageID 5655, 5678. In his early years in that capacity, Dr. Khalaf did not gain extensive experience managing other employees. Nonetheless, in 2002, he attained "Leadership Level (LL)" 6, Ford's lowest managerial level.² Three years later, in 2005, Dr. Khalaf moved up to an LL5 position. R.134, 3.13. Tr., PageID 5663-5664.

In 2006, Dr. Khalaf met the new Vice President of Global Quality at Ford, Bennie Fowler. During the conversation, Dr. Khalaf shared information about his educational and professional background. Dr. Khalaf also told Fowler that he had immigrated from Lebanon and spoke Arabic. R.134, 3.13 Tr., PageID 5671-5672.

In 2007, Fowler reorganized the Global Quality Department and eliminated Dr. Khalaf's position. Id . at PageID 5673. According to Dr. Khalaf, he had been assured by another manager that, even with his job gone, he would remain at the LL5 level, though it would require a new reporting relationship. However, as Dr. Khalaf later learned, this was incorrect, as Fowler then assigned him to an LL6 position. Id . at 5673-5674. Nonetheless, pursuant to Ford's "in-grade protection" policy, Dr. Khalaf was permitted to maintain the same salary and benefits of an LL5 while serving as an LL6. Id . at PageID 5675; R.135, 3.14.Tr., PageID 5839-5840.

In January 2008, Fowler approved a job transfer for Dr. Khalaf to Brazil. R.137, 3.19.Tr., PageID 6129. According to Fowler, this international role was a "high-rank assignment[ ]" for Dr. Khalaf that "not everyone [at Ford] had the opportunity" to hold. R.134, 3.13.Tr., PageID 5683. The position was intended to last two years, with Dr. Khalaf supervising four or five Ford employees. R.140, 3.22.Tr., PageID 6884. However, after just one year in his new job, Dr. Khalaf was sent back to the United States by his supervisor, Ruebens Vaz—a decision that, according to Ford, resulted from Dr. Khalaf's "lack of management skills" and adverse effect on "the morale of the team" he was supervising. Id. at 6885, 6890; see id. at 6890 (supervisor explaining that Dr. Khalaf had "lost the team," and therefore, the supervisor "had to make the decision to ... end the assignment"). Upon Dr. Khalaf's return to the United States, he immediately accused Vaz of discrimination and harassment based on race or national origin, and mistreatment during one-on-one meetings. R.135, 3.14.Tr., PageID 5831-5833, 5835.

Fowler assigned Dr. Khalaf to a new job as a "Quality Functional Leader (QFL)" in Ford's Quality Strategy and Productive Placement Department (QS&PP Department), R.134, 3.14.Tr., PageID 5840; R.137, 3.19.Tr., PageID 6130, which is part of Ford's Global Quality Organization. In this group, Dr. Khalaf worked as an LL6 on cost-savings projects for Ford. R.135, 3.14.Tr. PageID 5674-5675. According to Ford, Dr. Khalaf was deliberately placed as an LL6 through the company's "Individual Grade Protection" Program. Under this program, a returning international-service employee retains the Leadership Level held during the foreign assignment for a limited time as the employee seeks a job to restore the higher Leadership Level that the employee held prior to the foreign assignment. Id. at PageID 5839–5840.

In June 2012, following the resignation of the QS&PP Department manager, Fowler appointed Dr. Khalaf as an interim manager of this department. Shortly thereafter, the appointment became permanent, R.136, 3.15.Tr., PageID 6009, 6014; R.135, 3.14.Tr., PageID 5706, 5710–5714, 5746; R.136, 3.15.Tr., PageID 6010–6012, and Dr. Khalaf again became an LL5. R.135, 3.14.Tr., PageID 5746. In this new management role, Dr. Khalaf oversaw two teams of Ford employees: (1) QFLs (Dr. Khalaf's former job), who worked on cost-saving projects; and (2) Quality Analysts, who were responsible for gathering data and preparing detailed PowerPoint presentations for Ford's weekly "Business Plan Review" (BPR) meetings. R.135, 3.14.Tr., PageID 5703, 5707. BPR meetings, as Ford explains, were essential strategy sessions with Ford's executive leadership team.³ The BPR presentations involved lengthy reports (of approximately 500 pages) and critical quality data about Ford's vehicles. R.138, 3.20.Tr., PageID 6466–6470. Given the importance of the meetings, Fowler testified, he always "needed the information to be timely" and "free from errors." R.137, 3.19.Tr., PageID 6121. That standard was not met by Dr. Khalaf's team, according to Fowler. Compounding the problem, Fowler was disappointed with Dr. Khalaf's leadership of his team at the time. Particularly, while Fowler had expected Dr. Khalaf "to establish the relationships with the team" and "spend time learning what the standards are, learning what the information is, and working with the teams from the business office," Dr. Khalaf seemed to struggle with this role. Indicative of this, in June 2013, Kim Harris, one of the employees directly reporting to Dr. Khalaf, recorded that as a result of Dr. Khalaf's management style, the "[d]epartment is in [t]urmoil (extremely high stress levels, some have had to seek counseling, many applying to get out of th[is] department)." R.79-12, PX27, PageID 2487.

B. Dr. Khalaf's Alleged Protected Conduct

Dr. Khalaf alleges three instances of protected conduct in support of his retaliation claims against Jay Zhou, to whom Dr. Khalaf reported from August 2013 to June 2014.

The first involved a heated phone call between two employees in Dr. Khalaf's department, Pauline Burke and David Buche, in February 2013. This exchange reportedly involved discussion of cost-saving measures. Buche allegedly told Burke to "be a big girl and come up with the savings." R.79-7, PX15, PageID 2459.

Upon learning of the phone exchange, Dr. Khalaf directed Burke to send a "claim" to Human Resources (HR). R.79-8, PX16, PageID 2469.⁴ In her HR submission, Burke indicated she had a "right to work in a non-hostile environment." However, in neither Burke's filing nor subsequent email exchanges between Dr. Khalaf and HR did Burke or Dr. Khalaf ever characterize the phone conversation as involving sexual discrimination or sexual harassment. See id. ; R.79-8, PX16, PageID 2468–2469.

The second instance of protected conduct...