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IBM Hit with $1.5M Discrimination Verdict Despite Sham Investigation

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The judge said he suspected that “the purpose of the investigation was more to exonerate IBM than to determine if [the employee] was treated fairly."


A federal jury in Connecticut awarded $1,499,891 to a 61-year-old manager after IBM terminated him with the knowledge that it was discriminating against him on the basis of his age. In a key decision, the judge excluded a company HR report that whitewashed IBM’s actions.

The jury found that IBM “knew or showed reckless disregard for whether its termination” of James Castelluccio constituted age discrimination. Accordingly, he may also be entitled to double back pay, and would add another $1 million to the total award, plus attorney fees.

Castelluccio was a Vice President who started at IBM in 1968. IBM notified him in 2007 that he would be removed from his position and put “on the bench” — he remained employed by the company (with pay), but had no real work assignment.

At the time of his termination in 2008, Castelluccio's base salary in 2007 was $204,000, and he earned an additional incentive bonus of $44,550. He sued IBM charging violations of the federal Age Discrimination in Employment Act of 1967 and the New York State Human Rights Law.

Investigation was One-Sided

When Castelluccio learned he was going to be fired from his post as Delivery Project Executive of IBM's Wellpoint account, he complained to IBM management that he was being discriminated against because of his age. An IBM human resources manager then conducted an “open door” investigation into his complaint and reported that he was treated fairly and not discriminated against.

[sws_yellow_box box_size="550" box_align="right"]Get legal news for consumers delivered into your email inbox by subscribing with the form on the right side of the screen. [/sws_yellow_box]However, the federal court precluded the HR report from evidence, saying that “while purporting to make objective findings,” it failed to include Castelluccio’s account of his firing or his performance reviews. Judge Squatrito said he suspected that “the purpose of the investigation was more to exonerate IBM than to determine if [the employee] was treated fairly.”

“As this case demonstrates, the promptness, thoroughness and impartiality of an employer’s internal workplace investigation can make an enormous difference in the outcome of a case,” said lawyer Lorene F. Schaefer, a workplace investigator with Workplace Investigations Group. “The plaintiff’s bar is growing increasingly sophisticated in its strategic efforts to preclude employers from introducing into evidence these types of investigations.”

Lawyers representing the plaintiff were Amy S. Zabetakis and Kathryn A. Sherman of Rucci, Burnham, Carta, Carello & Reilly, plus Mark R. Carta of Carta, Mcalister & Moore. The case is Castelluccio v. International Business Machines Corp., Case No. 3:09CV1145.

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