## Facts

- Conrad S. Caruso was a partner in Peat, Marwick, Mitchell & Company (Peat Marwick), a large accounting firm.
- Peat Marwick evaluated partner performance using quantitative measures, including:
  - Accountancy income (client billings), with an annual goal of about $800,000.
  - Chargeability (percentage of time billed to clients), with a target range of 40%–60%.
- In Caruso’s 1983 annual review, he was rated underperforming because he billed about $300,000 and had chargeability of about 34%.
- Caruso’s manager, William Hasler, set performance-improvement expectations for 1984.
- At Caruso’s 1984 review, he remained classified as underperforming, but Hasler noted progress and anticipated further improvement.
- Shortly after the 1984 review, Peat Marwick introduced an early-retirement program (referred to in the record as the EERP) that directed certain older, underperforming partners to retire early with favorable benefits, without first receiving additional performance-improvement opportunities.
- The EERP applied to underperforming partners in two age-plus-service categories: (1) age plus years of service over 72, and (2) age plus years of service over 63.
- Under the firm’s approach, younger underperforming partners who did not fall within the EERP were generally given counseling and time to improve before being pushed to leave.
- Caruso was about 50 years old and fell within the EERP category based on age plus years of service; he was pressured toward early retirement rather than given further counseling.
- Caruso accepted early retirement in January 1985 but claimed it was not truly voluntary and operated as an age-based termination.
- Peat Marwick moved for summary judgment, arguing (1) Caruso was not an “employee” covered by the ADEA because he was a partner, and (2) any separation was voluntary and driven solely by performance, not age.

## Issues

1. Whether Caruso’s status as a “partner” barred ADEA coverage as a matter of law, or whether a jury could find he functioned as an “employee” under the ADEA.
2. Whether there were genuine disputes of material fact on whether Caruso was forced to retire (constructive discharge) and whether age played a role in the decision.

## Decision

- The court denied Peat Marwick’s motion for summary judgment.
- The court held that Caruso’s ADEA coverage could not be resolved on summary judgment because the record raised a factual question whether, despite the partnership label, Caruso operated more like an employee than an owner.
- The court held that the evidence created triable questions on whether Caruso’s early retirement was voluntary or the product of pressure that could amount to constructive discharge.
- The court held that the EERP’s use of age-plus-service thresholds and the firm’s different treatment of older versus younger underperforming partners could support an inference of age discrimination, making summary judgment inappropriate even though Peat Marwick offered a performance-based explanation.

## Legal Principles

- ADEA coverage does not turn solely on titles; whether an individual is an “employee” may depend on the actual relationship, including the degree of control exercised by the organization and the individual’s real authority and ownership incidents.
- Summary judgment is improper when the record would allow a reasonable factfinder to conclude that an apparent resignation or retirement was coerced and thus equivalent to a discharge.
- In an ADEA disparate-treatment case analyzed under burden-shifting, an employer may articulate a legitimate reason (such as poor performance), but the plaintiff can reach trial by producing evidence that the reason may be a mask for age-based treatment.
- A program that channels older workers into retirement based on age-linked criteria (including age plus service) and withholds improvement opportunities offered to younger workers can be evidence from which a jury may infer discriminatory motive.

## Conclusion

The court denied summary judgment because factual disputes remained about whether Caruso was an ADEA-covered employee despite being labeled a partner, and whether Peat Marwick’s age-plus-service early-retirement program and the pressure applied to Caruso could support a finding that he was effectively forced out because of age rather than solely for performance reasons.


Caruso v. Peat, Marwick, Mitchell & Company, 765 F. Supp. 144 (1991)