A federal court has rejected IBM’s attempt to dismiss a lawsuit brought by a former employee who claims he was fired because he is a white male, clearing the way for race and gender discrimination claims to proceed under Title VII and Section 1981.
The former employee, R.D., was a senior managing consultant in IBM’s consulting division for seven years. He alleged he was terminated in 2023 after being placed on a performance improvement plan (PIP) based on claims that he failed to bring in new clients and meet client demands. However, R.D. argued those reasons were pretextual, saying he was never required to sign new clients and consistently received high performance ratings from existing clients, including the U.S. Army’s TACOM division.
“IBM never told him he was required to sign and develop new clients,” the court noted. “Indeed, client development was not part of his job description and was not within his control.”
The court found that R.D.’s complaint, when taken as true, plausibly alleges that IBM’s diversity policy created financial incentives for managers to terminate white male employees in order to increase executive representation of women and racial minorities.
Court finds plausible link between diversity incentives and termination
IBM moved to dismiss the case under Rule 12(b)(6), arguing the complaint failed to state a viable claim. But the court ruled that R.D.’s allegations, including details of internal diversity goals and performance-based financial incentives, plausibly suggest that his race and gender were factors in his termination.
According to IBM’s annual reports and proxy statements cited in the ruling, executive bonuses were tied to increasing diversity, with specific targets for women, Black, and Hispanic representation. The company’s CEO reportedly told executives they needed to improve minority and gender representation by 1% annually, or risk losing bonuses or even termination.
“IBM’s ‘quota system is tied to bonus compensation in such a way that it incentivizes impermissible racial discrimination and disincentivizes refusal to engage in such discrimination,’” the complaint alleged.
The court said that these details go beyond aspirational diversity goals and support an inference that IBM “improperly consider[s] race or gender as a factor in employment-related decisions.”
High client ratings, but sudden PIP
R.D. supported his claims by pointing to years of high Net Promoter Scores — IBM’s key performance metric — from long-term clients. He said that in the four years prior to his termination, he consistently scored nines or higher on a ten-point scale and that his work was publicly praised in internal meetings.
Despite this, his supervisor placed him on a PIP in July 2023, citing low utilization and failure to meet client demand. The PIP required “full utilization by November 1,” a target that R.D. said was unrealistic given that he could not assign himself to projects or influence client decisions.
The court noted that more than half of the employees in his division were “on the bench” at the time, awaiting new assignments. Still, IBM terminated him on October 31, 2023.
The court concluded that these allegations were sufficient to support an inference that the stated reasons for his termination “were not the real reasons for its actions.”
‘Reverse discrimination’ claims allowed to proceed
Because R.D. is a white male alleging discrimination, he must meet the legal standard for reverse discrimination claims in the Sixth Circuit, which requires showing “background circumstances supporting the suspicion that the defendant is that unusual employer who discriminates against the majority.”
The court ruled that this standard was met, noting that IBM’s own documents supported the existence of a financial incentive program tied to workforce demographics and that R.D.’s supervisors stood to benefit from his termination.
IBM had argued that its diversity incentive program applied only to executives and that R.D. had not shown he was part of that population. But the court found it plausible that the incentive structure extended to his managers, who “had a financial incentive to further the company’s diversity goals.”
The court also rejected IBM’s argument that the complaint failed to identify similarly situated employees who were treated differently. “A complaint need not plead all the elements of a prima facie case in order to survive dismissal,” it said. Instead, it must present enough facts to support a reasonable inference of discrimination, which the court found R.D. had done.
Motion to dismiss denied
The court concluded that “it is plausible that IBM’s Diversity Policy incentivized his managers to discriminate against white males and that [his supervisor’s] unrealistic PIP was a means to carry out that policy by creating a pretext to terminate” him.
Accordingly, the court denied IBM’s motion to dismiss. The case will now proceed, allowing R.D.’s race and gender discrimination claims to be litigated on their merits.
For more information, see https://s3.documentcloud.org/documents/25873031/us-dis-miwd-1-24cv852-d662835529e1752-opinion-signed-by-chief-judge-hala-y-jarbou-tmb-en.pdf
