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Terminate the Old White Man to Improve a Company’s Diversity Profile? Better Rethink Your DEI Strategy.

January 19, 2023

Laura L. Rubenstein

On December 12, 2022, Senior U.S. District Court Judge Paul Grimm (Maryland) green-lighted an older white male plaintiff’s lawsuit to move his claims forward on the bases of race and gender against his former employer (Lutz v. Liquidity Services, Inc., Civil Case No.: PWG-21-1229). Plaintiff Michael Lutz, the VP of Human Resources at the time, was apparently terminated by the CEO/Chairman of the Board because, as explained in Lutz’s lawsuit, the company had a “diversity problem” and wanted to improve the diversity profile of the company. The CEO’s purported plan was to jettison Lutz and promote an African-American woman to his position because executive leadership was comprised of all white men. According to the lawsuit, the Company publicly announced Mr. Lutz’s retirement with praise for his accomplishments, yet privately terminated him, in part, for performance issues.

Although the CEO denied making such statements and testified that the company was not focused on diversity, there was evidence to the contrary in a Securities and Exchange Commission filing stating that it recently added “racial and gender diversity to the executive team” by promoting an internal candidate.  

Lutz filed an administrative charge, followed by a lawsuit in federal court. While the company attempted to have the matter dismissed on a motion for summary judgment, Judge Grimm allowed the case to proceed on the theory that the company discriminated against Lutz on the basis of his gender and race.

Let this be a lesson to all focused on increasing diversity, equity and inclusion (DEI) among employees and leadership at their companies - - unlawfully terminating people to make room for others is not advisable. Trying too hard to fix one problem can result in even bigger ones. There are always better solutions.

For questions about your employment matters, reach out to our experienced advisors and litigators at www.RKWlawgroup.com.

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