E.E.O.C. v. Sandia Corp.

• Decision Date: 13 August 1980
• Docket Number: No. 79-1589,79-1589
• Citation: 639 F.2d 600
• Parties: 23 Fair Empl.Prac.Cas. 799, 23 Empl. Prac. Dec. P 31,175 EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff-Appellee, v. SANDIA CORPORATION, a corp., Defendant-Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 600

639 F.2d 600

23 Fair Empl.Prac.Cas. 799,

23 Empl. Prac. Dec. P 31,175

EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff-Appellee, v. SANDIA CORPORATION, a corp., Defendant-Appellant.

No. 79-1589.

United States Court of Appeals Tenth Circuit.

Argued May 5, 1980.

Decided Aug. 13, 1980.

Robert H. Clark, John M. Kulikowski of Keleher and McLeod, Albuquerque, N. M., for individual plaintiffs.

Kerry L. Adams, Atty., U. S. Dept. of Labor, Washington, D. C. (Carin Ann Clauss, Sol. of Labor, Donald S. Shire, Associate Sol., Washington, D. C., James E. White, Regional Sol., Dallas, Tex., and Lois G. Williams and Mary Ann Bernard, Attys., U. S. Dept. of Labor, Washington, D. C., with them on the brief), for plaintiff-appellee.

Robert M. St. John, Albuquerque, N. M. (Bruce Hall and Kenneth J. Ferguson, Albuquerque, N. M., with him on the brief), of Rodey, Dickason, Sloan, Akin & Robb, P.A., Albuquerque, N. M., for defendant-appellant.

Before SETH, Chief Judge, and BARRETT and DOYLE, Circuit Judges.

WILLIAM E. DOYLE, Circuit Judge.

PRELIMINARY STATEMENT

This cause was commenced on March 20, 1975, in the United States District Court for the District of New Mexico, on which date the United States Department of Labor filed a complaint against Sandia alleging age discrimination under Section 7(b) of the Age Discrimination in Employment Act, 29 U.S.C. Section 621, et seq. Also alleged to be violative of the ADEA was an administrative practice maintained by Sandia until April 30, 1973, which mandated intervals between salary increases and known as "stretch-out." Subsequently, on September 16, 1975, this action was consolidated with two private actions, previously pending in the trial court, which actions arose from the same occurrence, namely, a work force reduction conducted by Sandia which had commenced in the spring of 1973.

This action is to be distinguished from these previously pending private actions which are also on appeal in this court in our Nos. 79-1021, 79-1168 through 79-1181, Mistretta, et al. v. Sandia Corporation, which were consolidated with this case by order of this court on March 9, 1979, and argued together with this case. This case is the principal action, and the private actions are governed by the law and evidence of this action, although additional legal and factual issues are presented by the private actions which are not considered here.

The three consolidated actions proceeded as a "spurious class action" under the provisions of 29 U.S.C. Section 216 rather than as a class action under Rule 23 F.R.C.P. Because of the multiplicity of parties and issues involved in the continuous filing of claims in the government's action and of consents to become plaintiffs in the private actions, possibly totaling 225, the issues of individual claims and damages and whether claims were timely filed were postponed, and the Secretary of Labor's action to establish a pattern or practice of unlawful discrimination, along with the same issue from the actions of the private plaintiffs, was tried to the court, Edwin L. Mechem, Judge, on January 19 through February 17, 1977. The object was to divide the "liability" and "remedial" issues involved in the various claims. The sole question to be determined was whether a prima facie case of age discrimination in Sandia's employment practices could be shown.

On October 20, 1977, the trial court issued an Interlocutory Opinion in which it held, inter alia, that a prima facie case had been established showing that Sandia had engaged in a pattern or practice of discrimination against a portion of the protected class, those employees between the ages of 52 and 64. The opinion directed that at the subsequent trial, Sandia would proceed and have the burden of presenting evidence in its defense, responding to the prima facie case and overcoming it. Having made findings and conclusions, partially based upon the statistical evidence, the trial court held that

It had been previously decided that individual claims in the private action would follow the trial on pattern or practice issues. Individuals age 40 to 51 who filed consents in the private action may present their individual cases that age was a factor in their selection for layoff. They, however, have the burden of putting on a prima facie case of discrimination and must carry the burden of proof. Consent plaintiffs laid off between March 23, 1973 and October 18, 1973, in the 40-51 age group, must also prove that the notice requirement should not bar their complaints. These burdens must also be carried by individuals ages 40-65 who filed consents and who were laid off involuntarily prior to the March, 1973 reduction in force.

This concludes the liability phase of this action. In the remedial phase, the focus will be on individual relief. Sandia may present evidence showing that each individual was selected for layoff based on reasons other than age, subject to further evidence by the Government or consent plaintiff showing that reasons are pretexts for unlawful discrimination. International Brotherhood of Teamsters v. United States, 431 U.S. 324, 97 S.Ct. 1843, 52 L.Ed.2d 396 (1977).

Pursuant to the above Interlocutory Order, the public and private suits were separated for trial in the "second phase." Trial of the issues involved in the actions brought by the first seventeen private plaintiffs commenced on June 20, 1978 and continued through July 6, 1978. Trial of the issues raised by the second group of fourteen plaintiffs claiming through the Secretary of Labor was held from October 24 through November 2, 1978. Subsequent trials were held thereafter. ¹ On May 31, 1979, a "partial final judgment" was entered on findings and conclusions entered February 20, 1979, in favor of the Secretary of Labor on the claims of eleven former Sandia employees in the total sum of $333,614 for lost earnings, $9,665 for lost savings contributions, and other relief, which judgment forms the basis for this appeal. On July 1, 1979, the United States Equal Employment Opportunity Commission succeeded to the enforcement authority of the Secretary of Labor, 3 C.F.R. 321 (1979), which fact, it is agreed by the parties, has no effect upon the issues which are to be considered here. Subsequently, the EEOC succeeded the Secretary of Labor as a party herein. The judgment considered here granted injunctive relief, back pay, certain benefits, and reinstatement to eleven employees, all of whom were between the ages of 52 and 64 and had been terminated by Sandia in 1973. Issues relating to damages on behalf of present and former Sandia employees arising as a result of certain salary administration practices known as "stretch-out," are still pending in the trial court. As to the claims of two claimants, the trial court found in favor of Sandia and the claims were dismissed. The record is incomplete as to the disposition of the claim of one claimant, Donald E. Fossum.

SUMMARY OF FACTS

The factual background which has given rise to this case is essential to an evaluation of the issues raised in this appeal. Sandia was first organized in 1946 as an engineering and testing division of Los Alamos Scientific Laboratories which were then engaged in the field of developing atomic weaponry. In 1949, it was incorporated as a wholly owned subsidiary of Western Electric Company to serve as prime contractor engaged in engineering and testing for the United States Atomic Energy Commission. All of Sandia's contracts and work are federal and all of its funding, including funding for compensation of personnel, derives from federal appropriations. During the 1960's, Sandia engaged in research and development activities as assigned. Now it is engaged in the development of new technologies, including nuclear weaponry, nuclear power and safety, and solar energy technology and projects. Its primary responsibility continues in the area of nuclear ordnance.

The Atomic Energy Commission has now become the United States Energy Research and Development Administration, and the functions of Sandia are under the jurisdiction of the United States Department of Energy. By the terms of its contract with ERDA, Western Electric does not receive profits from Sandia's operations.

Inasmuch as Sandia's sole funding is federal, it undergoes change as a result of federal policies and political needs. In 1968, Congress instituted cutbacks in project funding in activities of Sandia. A work force reduction was required to be instituted at Sandia in 1970, with existing employees being terminated both voluntarily and involuntarily. In 1971, another program was instituted to terminate some employees involuntarily, and this program was examined but left unchallenged by the Department of Labor. It was specifically approved by the EEO compliance section of the AEC.

In 1972, however, a further budget cut for the fiscal year 1974 indicated to a committee of administrators formed by Sandia that its 12% reduction in staff which had been achieved was going to be insufficient: approximately 800 additional employees were to be terminated. On January 29, 1973, the threatened reduction which led to this action took place. Management announced to the employees that a further force reduction program was to be instituted during the spring of 1973.

The resulting program was widespread and painful. Each of Sandia's vice presidents was assigned a quota of existing personnel to nominate for termination, and supervisors were required to review and evaluate existing employees. Only staff or technical employees and the "associate" and "assistant" staff and technical level employees (designated as "non-graded" employees) were involuntarily terminated. Prior to the reduction in force there were approximately 4500 "non-graded" employees. The program terminated 810 employees; of these, 320 were terminated involuntarily; 306 of these were classified as "non-graded." A total of 207 of the 306 terminated "n...