Selby v. Pepsico, Inc.

• Decision Date: 16 October 1991
• Docket Number: C-89-3092-CAL.,No. C-89-3091-CAL,C-89-3091-CAL
• Citation: 784 F. Supp. 750
• Court: U.S. District Court — Northern District of California
• Parties: Charles A. SELBY, Plaintiff, v. PEPSICO, INC., Defendant. William L. NESBIT, Plaintiff, v. PEPSICO, INC., Defendant.

784 F. Supp. 750

Charles A. SELBY, Plaintiff, v. PEPSICO, INC., Defendant.

William L. NESBIT, Plaintiff, v. PEPSICO, INC., Defendant.

Nos. C-89-3091-CAL, C-89-3092-CAL.

United States District Court, N.D. California.

October 16, 1991.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Alexander H. Singleton, Lynne L. Bentley, Law Offices of Alexander H. Singleton, San Jose, Cal., John A. McGuinn, McGuinn Hillsman & Palefsky, San Francisco, Cal., for plaintiff.

Robert T. Zielinski, Richard E. Lieberman, Ross & Hardies, Chicago, Ill., Robert M. Cassel, San Francisco, Cal., for defendant.

ORDER GRANTING SUMMARY JUDGMENT

LEGGE, District Judge.

These cases are presently before the court on defendant's motions for summary judgment. After discovery was concluded, defendant filed these motions. At the oral argument, this court vacated the trial date and gave plaintiffs additional time to oppose the summary judgment motions. Additional oppositions were filed. The motions were then submitted to this court for decision. Because the factual and legal issues in these cases are substantially similar, both are addressed in this order. The court has reviewed the moving and opposing papers, the record of the case, and the applicable authorities, and concludes that there are no genuine issues of material fact on the matters discussed below, and that summary judgment should be entered in favor of defendant in both actions.

I.

Plaintiffs Nesbit and Selby allege that defendant Pepsico: (1) breached their employment agreements and (2) discharged plaintiffs because of their age in violation of California Government Code § 12900, et seq.¹ Plaintiff Nesbit also asserts a claim for discrimination based on his alleged physical disability.

II.

Plaintiffs were employees of New Century Beverage Co. ("NCB"), a soft drink bottler. On December 29, 1986 Pepsico acquired NCB and merged NCB's operations into its own bottling operations. At the time of acquisition, plaintiff Selby (age 59) was NCB's Assistant Operations Manager and plaintiff Nesbit (age 49) was a Chain Account Manager. Pepsico terminated plaintiffs and seventeen other salaried employees on May 6, 1987, as part of an alleged "reduction in force" ("RIF") and general restructuring of NCB's operations. Of the nineteen employees terminated, ten were younger and nine were older than forty years of age.

Prior to Pepsico's acquisition of NCB, 262 salaried employees worked at NCB. By December 1987, six months after the RIF began, Pepsico employed 233 salaried workers, an approximate 10% reduction.² In December 1988, one year later, three salaried positions had been added, for a total of 236 employees. Thus, a reduction of approximately 10% of the salaried work force was made and maintained over an eighteen month period.

III.

Plaintiffs allege that their discharge resulted from discrimination on the basis of their age, in violation of California's Fair Employment and Housing Act ("FEHA"). Cal.Govt.Code § 12900 et seq. This court, exercising its diversity jurisdiction, applies the substantive law of the state. However, the California courts have noted that:

Because the language and objectives of California's Fair Employment and Housing Act as it relates to age discrimination closely parallel the language and objectives of the federal Age Discrimination in Employment Act (29 U.S.C. § 621 et seq.), we refer to federal decisions where appropriate.

Stephens v. Coldwell Banker Commercial Group, Inc., 245 Cal.Rptr. 606, 199 Cal. App.3d 1394, 1399 (1988) (citation omitted). In addition, Stephens noted that "precedential decisions of the Fair Employment and Housing Commission dealing with age discrimination, which `serve as precedent' in interpreting the state act, similarly rely upon cases brought under the federal act." Id. (citations omitted). Thus, this court may look to cases addressing both the state and federal statutes for guidance in applying state law.

California courts have adopted the U.S. Supreme Court's approach in discrimination cases with respect to the presumptions and the shifting of burdens, as set forth in Texas Dept. of Community Affairs v. Burdine, 450 U.S. 248, 101 S.Ct. 1089, 67 L.Ed.2d 207 (1980); Sischo-Nownejad v. Merced Comm. College District, 934 F.2d 1104 (9th Cir.1991). To establish a prima facie case of age discrimination, and thereby shift the burden of proof to defendant, as in Title VII cases, plaintiffs must produce enough evidence to permit the trier of fact to infer the fact of age discrimination. Texas, 450 U.S. at 254 n. 7, 101 S.Ct. at 1094 n. 7.

A plaintiff alleging age discrimination may proceed under either of two theories of liability: disparate treatment or disparate impact. Rose v. Wells Fargo, 902 F.2d 1417 (9th Cir.1990). Plaintiffs' claims fall within the disparate treatment theory. Proof of disparate treatment requires a showing that the employer treated some people less favorably than others because of their age. An employee may establish a prima facie case of age discrimination under the disparate treatment theory by showing that he: (1) was a member of the protected class, age 40-70; (2) was performing his job in a satisfactory manner; (3) was discharged; and (4) was replaced by a substantially younger employee with equal or inferior qualifications. Rose, 902 F.2d at 1421.³ The failure to prove the fourth element is not necessarily fatal if the discharge results from a general reduction in the work force due to business conditions. Id. However, in RIF cases, plaintiff must show "through circumstantial, statistical, or direct evidence that the discharge occurred under circumstances giving rise to an inference of age discrimination." Id. And:

in a reduction-in-force case, there is no adverse inference to be drawn from an employee's discharge if his position and duties are completely eliminated ... If the discharged employee cannot show that his employer had some continuing need for his skills and services in that his various duties were still being performed, then the basis of his claim collapses.

Id. (citing Leichihman v. Pickwick Int'l, 814 F.2d 1263, 1270 (8th Cir.), cert. denied, 484 U.S. 855, 108 S.Ct. 161, 98 L.Ed.2d 116 (1987)). Defendant argues that plaintiffs have failed to meet the fourth element of the test by establishing that they were "replaced."

Establishment of a prima facie case operates to shift the burden to defendant to produce some evidence that it had legitimate, nondiscriminatory reasons for the employment decision. Watson v. Fort Worth Bank & Trust, 487 U.S. 977, 108 S.Ct. 2777, 101 L.Ed.2d 827 (1988). Defendant contends that plaintiffs' positions were eliminated as part of the RIF and that plaintiffs' former duties were reassigned to those employees who were retained.

If defendant carries its burden of production, plaintiffs must prove by a preponderance of all the evidence in the case that the legitimate reasons offered by defendant were a pretext for discrimination. Id. The ultimate burden of persuading the trier of fact remains at all times with plaintiffs. Id. Plaintiffs raise the issue of "pretext" to counter defendant's RIF defense. Assuming plaintiffs make a prima facie case of discrimination, they must also offer "specific and significantly probative evidence" that defendant's stated reasons (RIF) are merely a pretext for unlawful discrimination to avoid summary judgment. Schuler v. Chronicle Broadcasting Co., 793 F.2d 1010, 1011 (9th Cir.1986).

With those legal standards in mind, this court has examined the record.

IV.

Plaintiff Nesbit was a Chain Account Manager ("CAM") before Pepsico terminated his employment in May 1987. Of the seven CAMs employed by NCB, four were over 40, and three were under 40. Five were retained by Pepsico. Two CAM positions were eliminated, and the accounts formerly handled by those individuals were distributed among the five remaining employees in the department. The two employees fired were plaintiff Nesbit, age 49 and Cox, age 38. Four of the five employees retained were older than Cox, but younger than Nesbit.

Nesbit argues that he was replaced by a younger worker. However, his position was eliminated and his work reassigned to the retained employees. He argues that several younger persons were subsequently hired by Pepsico, and therefore he was "replaced" by a younger employee at a later time. The subsequent hires, however, occurred at a significantly later date. And those new employees were hired as replacements for CAMs who had originally been retained, but voluntarily left Pepsico later. They cannot be said to have "replaced" Nesbit. See Rose, 902 F.2d at 1422. No net growth in the number of CAMs resulted from the subsequent hires. Thus, Nesbit cannot establish that he was replaced by a younger employee. His position was eliminated as part of the actual RIF of CAMs retained by Pepsico after the NCB acquisition.

Plaintiff might nevertheless establish a prima facie case by showing "through circumstantial, statistical, or direct evidence that the discharge occurred under circumstances giving rise to an inference of age discrimination." Id. at 1421. However, "if the discharged employee cannot show that his employer had some continuing need for his skills and services in that his various duties were still being performed, then the basis of his claim collapses." Id. Although Nesbit's position was eliminated, it cannot be said that Pepsico no longer had a need for his skills and services. Had the entire CAM department been eliminated or absorbed into existing Pepsico operations, this defense would be available and persuasive. However, Pepsico retained five of the CAMs, thereby establishing a continuing need for the types of service formerly provided by Nesbit.

Although plaintiff's claim does not therefore collapse, he must still show that his discharge occurred under circumstances that give rise to an inference of age discrimination in order to establish...