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Randolph Brown v. L-1 Secure Credentialing

November 8, 2012



On October 25, 2012, the court held a hearing on defendants L-1 Identity Solutions, Inc. and L-1 Secure Credentialing Incorporated's (collectively, "defendants" or "L-1") September 7, 2012 motion for summary judgment.*fn1 Martin Jennings, Jr., appeared on behalf of plaintiff. Kristin Oliveira appeared on behalf of L-1. On review of the motion, the documents filed in support and opposition, after hearing the arguments of counsel, and good cause appearing therefor, THE COURT FINDS AS FOLLOWS:


A. Background

L-1 is an identity management solutions provider, creating personal identification documents such as driver's licenses and identification cards pursuant to contracts with state and federal governmental agencies. Hamel Decl. ¶ 5.

In 2008, L-1 acquired Digimarc Corp. ("Digimarc"), which operated a manufacturing facility in Sacramento, CA (known as the "Del Paso Plant"). Hamel Decl. ¶ 4. At the time of this acquisition, plaintiff Randall Brown ("plaintiff" or "Brown"), born May 26, 1949, was a salaried factory manager at the Del Paso Plant, having been hired in October 2006.*fn2

See Brown Decl. ¶¶ 1-2; Brown Dep. at 40:12-13; Pennetta Decl. ¶ 4. Prior to joining Digimarc as a factory manager, Brown had only two years of management experience gained between approximately 1982 and 1984. See Brown Dep. at 46:24--47:16. Brown understood that, as a production manager, the production process was ultimately his responsibility. Id. at 72:12-15.

Brown was the highest level employee at the Del Paso Plant where he oversaw a staff of seven employees and was responsible for the manufacturing of driver's licenses and identification cards for California and Michigan. Brown Dep. at 57:22-25, 70:25--71:2; Pennetta Decl. ¶¶ 4-5. The manufacturing process at the Del Paso Plant was well-established and routine, with only five discrete manufacturing steps. Pennetta Decl. ¶ 6.

While at the Del Paso Plant, plaintiff received a positive performance evaluation for the period of August 29, 2006 through December 31, 2006. See Brown Decl. ¶ 5, Ex. 1. Brown also received a satisfactory performance evaluation for the period of January 1, 2009 through December 31, 2009. Id. ¶ 6, Ex. 2.

On March 2, 2010, Brown received a letter from Leo Sullivan, President of L-1, for his "commitment and dedication during a very challenging 2009." Brown Decl. ¶ 8, Ex. 4.

On July 1, 2010, Brown received a salary increase. Brown Decl. ¶ 7, Ex. 3. In 2010, Brown assisted Dennis Kallelis, L-1's Chief Security Officer, on attaining NASPO*fn3 certification, which was required for the DMV Contract. See Brown Decl. ¶ 10, Ex. 5; Pennetta Supp. Decl. ¶ 7. On September 22, 2010, plaintiff and others received an email of thanks for their work on the NASPO certification. Brown Decl. ¶ 10, Ex. 5; Pennetta Supp. Decl. ¶ 7. This work culminated in receipt of a NASPO Level 2 Certification Award, which Brown accepted in November 2010 in Colorado. Brown Decl. ¶ 10. Brown went to Colorado to receive the award pursuant to L-1's policy of inviting factory managers to accept the NASPO certifications for their facilities. Pennetta Supp. Decl. ¶ 8.

B. The DMV Contract

In 2009, L-1 entered into a contract with the California Department of Motor Vehicles ("DMV") valued at over $100 million ("the DMV Contract") to produce driver's licenses and identification cards with new security features. Hamel Decl. ¶¶ 6-8. Because the provision of the new security features required a new and more complex manufacturing process, L-1 began working on a new production facility at the former McClellan Air Force Base ("the McClellan Plant") in Sacramento, California. Id. ¶ 9. Under this new manufacturing process, there were 13 discrete manufacturing steps, including at least two separate inspections before a final card was ready for delivery to the DMV. Pennetta Decl. ¶ 10.

In February 2010, about seven months before the McClellan Plant was scheduled to open, Senior Director of Manufacturing David Pennetta became Brown's direct supervisor. Pennetta Decl. ¶¶ 1, 3. Working out of Indiana, Pennetta supervises production managers at L-1's nine plants across the country. Id. ¶ 3. Pennetta reports to Jeffrey Hamel, L-1's Vice President of Program Management. Id. ¶ 2; Hamel Decl. ¶ 1. Hamel reports to Division Executive Vice President Bob Eckel. Hamel Decl. ¶ 3. Hamel and Eckel work out of Massachusetts. Id.

In May 2010, Pennetta traveled to Sacramento to begin planning for the opening of the McClellan Plant. Pennetta Decl. ¶ 7. The agenda for this visit was to review staffing and training plan details with Brown to ensure that both the Del Paso Plant and the new McClellan Plant could be operated each day during the startup of the new factory. Id.

In mid-2010, L-1's engineers and vendors visited the McClellan Plant to set up the equipment. Pennetta Decl. ¶ 11. Tim Arthur, a production control specialist in Sacramento who reported to Brown, helped the engineers set up the new equipment and then learned how to operate each machine. Id. Arthur was under the age of forty at all times relevant to this action.

In May or June 2010, Hamel visited the McClellan Plant. Hamel Decl. ¶ 10. At the time, numerous support personnel from L-1's Fort Wayne, Indiana facility were working with the plant operators to train them on the new equipment and get the factory ready for the start of production. Id. While there, Hamel noticed that Brown was not around often. Id. Hamel also learned from numerous support personnel that Brown was regularly absent and not spending time learning the new processes or equipment. Id. Hamel expressed these concerns to Pennetta. Id. Brown was aware that Hamel was displeased with his absence from the plant on at least one occasion. Brown Dep. at 136:25--137:17.

C. The McClellan Plant Opens and Faces Production Problems In late September 2010, the McClellan Plant opened and began working on the DMV Contract. Hamel Decl. ¶ 11; Pennetta Decl. ¶ 12. Immediately after opening and continuing to the beginning of 2011, the DMV rejected thousands of cards that did not meet its quality expectations. Pennetta Decl. ¶ 13. Some errors were cosmetic, but others were considered "fatal" -- i.e., they had mismatched photos and names, and incorrect or missing ultraviolet data. Id. Many of the defects were the result of software and engineering errors in the manufacturing process. Id. ¶ 12. The DMV would add the rejected cards into the next production job sent to the McClellan Plant, resulting in a backlog of cards to be produced. Id. ¶ 13.

The McClellan Plant, if operating to schedule, had the capacity to manufacture approximately 150,000 cards during a five-day week. Hamel Decl. ¶ 17. At one point in the Fall of 2010, the backlog of rejected cards grew to roughly 900,000 cards waiting to be made or reprinted. Id. To make progress on this backlog, overtime was authorized for an operation that would run 24 hours a day, 7 days a week. Id. This would allow the factory to make an additional 60,000-75,000 cards per week. Id. Under this new schedule, it was projected that L-1 would take nine weeks to recover from the production backlog. Id.

During this time, Pennetta began visiting the McClellan plant every four weeks, spending the majority of a week each time there. Pennetta Decl. ¶ 15; Brown Dep. at 128:18-23. Hamel also visited the McClellan Plant on a number of occasions in September, October, November, and December 2010. Hamel Decl. ¶ 13. While at the plant, Pennetta would "essentially take over as manager" directing the production of the cards and the operation of the machinery. Brown Dep. 129:1-4. Although Pennetta was reluctant to step on Brown's toes while there, he took an active role managing the McClellan Plant because he felt "that Brown was unwilling, unavailable, or unable to direct the staff." Pennetta Decl. ¶ 26.

In October 2010, the Deputy Director for Driver Services for the DMV, as well as the Program Manager at the DMV, spoke with Hamel and Eckel on a weekly basis to receive an update on the backlog. Hamel Decl. ¶ 14. Hamel, in turn, was speaking to the DMV Director on an almost daily basis to provide updates on L-1's progress. Id.

The DMV became increasingly dissatisfied with L-1. It complained to Hamel about the management of the McClellan Plant and expressed unhappiness with the poor quality and quantity of the cards being delivered. Hamel Decl. ¶ 15. Hamel told Pennetta that the DMV believed Brown was not the right factory manager for the new production. Pennetta Decl. ¶ 23.

The DMV also refused to make payments to L-1 for over six months after payment was due under the DMV Contract and did not make any payments until the backlog was fully eliminated in Spring 2011. Hamel Decl. ¶ 19. Additionally, because L-1 was providing defective cards at a greater rate than expected, the DMV increased its own inspections of the deliveries and charged L-1 a sizeable sum of money for the additional labor expense incurred as a result of those inspections. Hamel Decl. ¶ 18.

By mid to late October 2010, significant progress had not been made in eliminating the backlog of unmade cards for the DMV. Pennetta Decl. ¶¶ 20-21. In light of this, Pennetta told Brown that he needed to work the overnight shift until they made progress on catching up on the completed jobs. Id. He also directed Brown to work specific hours because of repeated reports that Pennetta had received that the staff needed questions answered and could not find Brown. Id. Pennetta told Brown that it was critical that he be at the McClellan Plant to oversee the inspection process, participating in inspections himself if necessary, to ensure that fatal defects were caught before the cards left the factory. Id.

By late October 2010, Pennetta became concerned that Brown was not doing enough to assist the team in working down the production backlog or guiding the operators on needed inspections to contain defects within the factory so that they would not be delivered to the DMV. Pennetta Decl. ¶ 22. While visiting the plant, Pennetta observed that Brown was often not physically on the factory floor and would sometimes be out of the facility during his work shift. Id. ¶ 24. Often, Pennetta needed to speak to Brown but could not find him. Id.

D. The October 26, 2010 Email

On October 26, 2010, Pennetta sent Brown an email itemizing his precise expectations of him ("the October 26, 2010 email"). Pennetta Decl. ¶ 16, Ex. A. Per this email, Brown was directed to provide daily status reports as well as reports of any equipment issues. Id. One of the reasons that Pennetta wrote this email was because he was not consistently receiving the information he needed from Brown to understand the production errors and help the team resolve the issues. Id. ¶ 16. Pennetta was displeased because he often had to chase down status updates from Brown, receiving them late or not at all. Id. ¶18. See also Brown Dep. 197:7-25.

The October 26, 2010 email also directed Brown to be at the plant "excessively to support what your team needs to be successful. Ask what they need to get the job done -- they will tell you how you can help or support they need." Pennetta Decl., Ex. A. Pennetta told Brown to be at the plant "excessively" because he perceived that Brown was not consistently available at the plant to provide support or answer the questions of factory staff or the engineers who were working on the equipment. Id. ¶ 19. Brown was aware of "[h]alf a dozen" instances when people were looking for him at the McClellan Plant but could not find him. Brown Dep. at 120:19--121:4. Brown explains these absences on his need to split his time between the McClellan Plant and the Del Paso Plant. Id. He was aware that on two separate occasions, management, including Pennetta, expressed concern about Brown's absences from the McClellan Plant. Id. at 127:12-14, 136:25--137:17.

Pennetta was disappointed to have to prepare the October 26, 2010 email because he believed that Brown, due to his management background, should have already known how to take steps to help the team complete card production jobs as efficiently as possible. Pennetta ¶ 16.

During the week of November 8, 2010, Brown was in Colorado to receive the NASPO certification award. See Brown Decl., Ex. 6. On November 9, 2010, Pennetta sent Brown an email directing him to switch his working hours upon his return from Colorado to 5:00 p.m. to 5:00 a.m. in order to assist the night shift team to maximize output and facilitate completion of the backlogs so that L-1 can make the 7:00 a.m. delivery every day. Id. Brown viewed Pennetta's directive as "micro-management." See id.

By mid-November 2010, Pennetta was still not receiving daily status reports seven days a week, as requested in the October 26, 2010 email. Pennetta Decl. ¶ 27. Brown testified that Pennetta was "obsessive" about receiving these status updates at 6:00 a.m. and 6:00 p.m., but did admit that sometimes he was so busy that he would send the status updates late or not at all. Brown Dep. at 197:11-12. On more than one occasion, Pennetta expressed displeasure and dissatisfaction to Brown regarding receipt of the status updates. Id. at 197:20-25.

When Pennetta did not receive daily status updates or when he could not locate Brown by calling the plant, he began regularly turning to Arthur, whom Pennetta saw as "always responsive and available at the plant." Penneta Decl. ¶ 18.

E. The Performance Improvement Plan

In or about November 2010, Hamel felt that Brown was ineffective in his management of the McClellan Plant and spoke to Eckel about terminating him. Hamel Decl. ΒΆ 15. Eckel supported the decision because the McClellan Plant was substantially behind in its production for the DMV and Brown was not taking sufficient steps to help Pennetta and the factory team to identify the defects and reduce the backlog. Id. Ultimately, ...

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