In Charles T. Merrick v. Hilton Worldwide, Inc., et. al. (No. 14-56853, filed 8/16/17), the United States Court of Appeals for the Ninth Circuit applied a nuanced analysis within the McDonnell Douglas burden-shifting framework to evaluate an employee’s allegations of age discrimination under California’s Fair Employment and Housing Act (“FEHA”).
In Merrick, the plaintiff employee filed an age discrimination lawsuit against his former employer alleging he was terminated from his position as Director of Property Relations at the Hilton La Jolla Torrey Pines Hotel (“Hotel”) on the basis of his age. At the time plaintiff was terminated in 2012, he was 60 years old and had been an employee of the Hotel for approximately twenty years. The Hotel claimed it terminated plaintiff not because of his age but rather, because of workforce reductions mandated across a number of Hilton Worldwide properties. In meeting company workforce reduction goals, Hilton instructed the Hotel to avoid eliminating positions (1) with direct guest contact, (2) with significant team member impact, and (3) that directly generated additional revenue for the Hotel. Hilton further instructed the Hotel it preferred to achieve the required payroll cut by eliminating a single position, if possible. The Hotel moved for summary judgment on the grounds plaintiff was selected to be terminated for these nondiscriminatory business reasons. The District Court granted the Hotel’s motion and plaintiff appealed.
On appeal, the Merrick court affirmed, holding plaintiff failed to raise a triable question of fact as to whether Hilton discriminated against him on the basis of age. In reaching its decision, the Merrick court applied the three-part McDonnell Douglas test as set forth by the United States Supreme Court in McDonnell Douglas Corp v. Green, 411 U.S. 792 (1973)). Under the McDonnell Douglas test, the plaintiff first bears the burden of establishing a prima facie case of discrimination. The burden then shifts to the employer to rebut this presumption by producing admissible evidence sufficient to show that “its action was taken for a legitimate, nondiscriminatory reason.” “If the employer sustains its burden, the presumption established in the first step disappears and the plaintiff must raise a triable issue suggesting that the employer’s proffered reason is mere pretext for unlawful discrimination, or other evidence of discriminatory motive.”
The Merrick court found plaintiff met his initial burden of establishing a prima facie case of age discrimination which required him to show he was “(1) at least forty years old; (2) performing his job duties satisfactorily; (3) discharged; and (4) either replaced by substantially younger employees with equal or inferior qualifications or discharged under circumstances otherwise ‘giving rise to an inference of discrimination.’” The burden then shifted to the Hotel to produce evidence showing its action was taken for a nondiscriminatory purpose. The Hotel provided evidence it terminated plaintiff for a number of nondiscriminatory reasons based on criteria set forth by Hilton in its workforce reduction instructions. Specifically, (1) eliminating plaintiff’s salary would allow the Hotel to comply with the workforce salary reduction requirement by laying off a single employee, (2) plaintiff’s position was not considered a high guest contact or revenue generating position; and (3) other departments were already understaffed due to previous layoffs. The court found this evidence sufficient to shift the burden back to plaintiff to show a triable issue suggesting the Hotel’s proffered reasons for his termination were pretextual.
In response, plaintiff argued that despite the fact the Hotel repeatedly asserted its managers aimed to comply with the salary reduction mandate by eliminating a single position, the Hotel conceded it ultimately failed to meet the salary reduction percentage. Even though it terminated plaintiff, the raises offered to remaining employees who assumed plaintiff’s former job duties actually offset some of the payroll savings. The Merrick court explained “[e]vidence undermining an employer’s stated reason for an adverse employment action “may ‘considerably assist’ a circumstantial case of discrimination, because it suggests the employer had cause to hide its true reasons.” Guz v. Bechtel Nat’l Inc., 24 Cal.4th 317, 361 (2000).
However, the Court clarified such evidence may still be insufficient to create a triable issue for “there must be evidence supporting a rational inference that intentional discrimination, on grounds prohibited by the statute, was the true cause of the employer’s actions.” “Context is key when a plaintiff alleges discrimination based on circumstantial evidence. Considering the context of this case – lost profits during the economic downturn, a series of layoffs over several years, the overall age of the workforce, the fact [plaintiff]survived previous reductions having then also been a member of a protected class, and the business reasons for selecting his position for elimination—such evidence was insufficient to permit a rational interference that the Hotel’s actual motive was discriminatory.”
The Merrick decision is a reminder that the stated business justifications for terminating employees who are members of a protected class will be subject to a nuanced scrutiny under the three-part McDonnell Douglas test.
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