Oliver v. Pacific Northwest Bell Telephone Co., Inc.

• Decision Date: 11 September 1986
• Docket Number: No. 52534-0,52534-0
• Citation: 724 P.2d 1003,106 Wn.2d 675
• Parties: , 54 Fair Empl.Prac.Cas. (BNA) 1449 Charles W. OLIVER and Linda L. Oliver, husband and wife, Appellants, v. PACIFIC NORTHWEST BELL TELEPHONE COMPANY, INC., a Washington corporation, Respondent.
• Court: Washington Supreme Court

Page 675

106 Wn.2d 675

724 P.2d 1003, 54 Fair Empl.Prac.Cas. (BNA) 1449

Charles W. OLIVER and Linda L. Oliver, husband and wife, Appellants, v. PACIFIC NORTHWEST BELL TELEPHONE COMPANY, INC., a Washington corporation, Respondent.

No. 52534-0.

Supreme Court of Washington En Banc.

Sept. 11, 1986.

Edwin Stone, Seattle, for appellants.

Schweppe, Krug & Tausend, P.S., J. Ronald Sim, Margaret L. Barbier, Michele A. Gammer, Seattle, for respondent.

PEARSON, Justice.

The appellants, Charles W. Oliver and his wife, Linda L. Oliver (the "Olivers"), brought an employment discrimination suit against the respondent, Pacific Northwest Bell Telephone Company ("PNB"), alleging that a company-wide policy which subjected employees to disciplinary proceedings for dishonest acts committed outside of employment was discriminatory because it had a disproportionate impact upon black employees. The trial court granted a directed verdict in favor of PNB, ruling that the disparate impact analysis was inapplicable to the present facts and, even if it did apply, the Olivers had failed to establish a prima facie case. We agree with the trial court and affirm its order directing verdict in favor of PNB.

The Olivers, who are black, were employees of PNB. Linda Oliver began employment as a staff clerk in the engineering department in April 1970; Charles Oliver began employment in December 1971 as a data systems analyst.

In 1976, while employed by PNB, the Olivers' home was burglarized. After the burglary, the Olivers falsified several insurance claims. In July 1978, the Olivers were charged with filing fraudulent insurance claims. PNB took no immediate action regarding the Olivers' employment status because the details of the Olivers' conduct were unclear. In November 1978, the Olivers pleaded guilty to a gross misdemeanor (attempt to file a false insurance claim). Consequently, in December 1978, PNB terminated the Olivers for violation of a company-wide policy which requires all employees to conduct themselves honestly, on and off the job.

In September 1980, the Olivers filed a complaint against PNB in the Superior Court for King County. The Olivers contended that PNB's policy of subjecting employees who commit dishonest acts outside of employment to disciplinary proceedings was in violation of RCW 49.60, because it had a disparate impact on blacks. The matter was tried before a jury. At the conclusion of the Olivers' case, PNB moved for a directed verdict. The trial court granted PNB's motion and dismissed the Olivers' complaint. The court held that the disparate impact theory of discrimination did not apply in the Olivers' case and, even if it did apply, the Olivers failed to establish a prima facie case. The Olivers appealed to the Court of Appeals which certified the matter to this court for direct review pursuant to RAP 4.2(a).

I

The rules for appellate review of an order directing verdict in favor of a party are well established: (1) evidence must be considered in favor of the nonmoving party; (2) no discretion is involved; and (3) the directed verdict will be upheld where there is no competent evidence, nor reasonable inferences arising therefrom, which would sustain a jury verdict in favor of the nonmoving party. Shelby v. Keck, 85 Wash.2d 911, 913, 541 P.2d 365 (1975). With these principles in mind, we now review the trial court's order directing verdict in favor of PNB.

In Washington, the prohibition against employment discrimination is found in RCW 49.60, which prohibits an employer from discharging or barring any person from employment based on race. RCW 49.60 is patterned after Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e-2 (1982). Consequently, decisions interpreting the federal act are persuasive authority for the construction of RCW 49.60. See Fahn v. Cowlitz Cy., 93 Wash.2d 368, 610 P.2d 857, 621 P.2d 1293 (1980).

Discrimination claims under RCW 49.60 may be brought under one of two theories, either "disparate impact" or "disparate treatment". See Fahn, at 378, 610 P.2d 857; Shannon v. Pay 'n Save Corp., 104 Wash.2d 722, 726, 709 P.2d 799 (1985). Either theory may be applicable to the same set of facts. Shannon, at 732, 709 P.2d 799 (citing Page v. U.S. Indus., Inc., 726 F.2d 1038, 1045 (5th Cir.1984); International Bhd. of Teamsters v. United States, 431 U.S. 324, 335 n. 15, 97 S.Ct. 1843, 1853 n. 15, 52 L.Ed.2d 396 (1977)).

In the present case, the Olivers did not allege discrimination under the disparate treatment theory, but rather based their claim solely upon disparate impact. Therefore, we limit our review to whether the trial court properly granted a directed verdict against the Olivers based on their disparate impact claim.

To establish a prima facie case of disparate impact, the plaintiff must prove: (1) a facially neutral ¹ employment practice, (2) falls more harshly on a protected class. Shannon, 104 Wash. at 727, 709 P.2d 799; International Bhd. of Teamsters, 431 U.S. at 349, 97 S.Ct. at 1861; Connecticut v. Teal, 457 U.S. 440, 446, 102 S.Ct. 2525, 2530, 73 L.Ed.2d 130 (1982); Dothard v. Rawlinson, 433 U.S. 321, 329, 97 S.Ct. 2720, 2726, 53 L.Ed.2d 786 (1977); Griggs v. Duke Power Co., 401 U.S. 424, 430-31, 91 S.Ct. 849, 853, 28 L.Ed.2d 158 (1971). Proof of an employer's intent to discriminate in adopting a particular practice is not required. Shannon, 104 Wash. at 727, 709 P.2d 799; Griggs, 401 U.S. at 432, 91 S.Ct. at 854; International Bhd. of Teamsters, 431 U.S. at 335 n. 15, 97 S.Ct. at 1854 n. 15. Upon establishing a prima facie case, the burden then shifts to the defendant to establish that the practice complained of has a " 'manifest relationship' to the position in question", Shannon, 104 Wash. at 727, 709 P.2d 799 (quoting Griggs v. Duke Power Co., supra, 401 U.S. at 432, 91 S.Ct. at 854), or is justified by a business necessity. Albemarle Paper Co. v. Moody, 422 U.S. 405, 425, 95 S.Ct. 2362, 2375, 45 L.Ed.2d 280 (1975).

In this case, we must determine if the Olivers have established a prima facie case of disparate impact. Thus, initially, we must decide whether the Olivers have proven that PNB's company-wide policy is facially neutral. The Olivers contend that PNB's policy of subjecting employees to disciplinary proceedings for committing dishonest acts has a disproportionate adverse effect on blacks because a disproportionate number of blacks commit dishonest acts. Thus, according to the Olivers, PNB's policy is susceptible to a disparate impact analysis. Aside from this general allegation, the Olivers engage in very little analysis regarding whether PNB's company-wide policy is facially neutral. PNB, on the other hand, argues that the disparate impact analysis is inapplicable to PNB's company-wide policy because it does not include objective, nondiscretionary criteria and is therefore not a facially neutral employment practice. We agree.

In Washington, in order for an employment practice to be characterized as facially neutral and therefore subject to analysis under disparate impact, a plaintiff must demonstrate that he is attacking an employment practice that includes objective, nondiscretionary features. Shannon v. Pay 'n Save Corp., 104 Wash.2d at 733, 709 P.2d 799. In this case, the trial court held that disparate impact analysis was not available to the Olivers because PNB "used a discretionary and subjective decision-making process in determining action to be taken when an employee was found to have committed a dishonest act and/or was convicted thereof." Verbatim Report of Proceedings, at 311. The evidence strongly supports the trial court's conclusion.

The record indicates the Olivers were terminated for violating PNB's company-wide policy which requires all employees to conduct themselves honestly on and off the job. Under this policy, a dishonest act, including a dishonest act resulting in a criminal conviction, potentially subjects the employee to disciplinary action, which may include dismissal. However, PNB's policy is not a flat rule which requires automatic termination resulting from commission of a dishonest act. Rather, PNB addresses each specific situation regarding a violation of the standards of conduct on a case-by-case basis, and ultimate disciplinary action depends on a variety of factors. In fact, several employees known to have committed dishonest acts remain employed with PNB.

Thus, it is clear PNB's policy is a discretionary and subjective employment practice that does not include objective or nondiscretionary practices which automatically terminate an employee for the commission of a dishonest act outside of employment. Therefore, the Olivers were not terminated by a facially neutral employment practice. Accordingly, disparate impact analysis is inapplicable to the facts of this case and the trial court's order directing verdict in favor of PNB should not be disturbed on appeal.

II

Even if we were to hold that subjective employment practices are susceptible to disparate impact analysis, see, e.g., Shannon v. Pay 'n Save Corp., 104 Wash.2d 722, 737, 739, 709 P.2d 799 (1985) (Utter, J., dissenting; Brachtenbach, J., dissenting), the Olivers have failed to establish the second element of a prima facie impact case, i.e., that the employment practice complained of falls more harshly on a protected class. As previously discussed, under disparate impact analysis the plaintiff bears the burden of proof on the issue of whether there is a facially neutral employment practice that has a substantial disproportionate impact on a protected class. Therefore, even assuming the Olivers could establish the first element of a prima facie case, they still must prove the employment practice complained of falls more harshly on a protected class.

Notwithstanding certain excluded evidence, the Olivers contend that they have established a prima facie case of disparate impact based on statistical data presented at trial by Ms. Rao and...