Rizo v. Yovino

• Decision Date: 27 April 2017
• Docket Number: No. 16-15372,16-15372
• Citation: 854 F.3d 1161
• Parties: Aileen RIZO, Plaintiff-Appellee, v. Jim YOVINO, Fresno County Superintendent of Schools, Erroneously Sued Herein as Fresno County Office of Education, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

854 F.3d 1161

Aileen RIZO, Plaintiff-Appellee,

v.Jim YOVINO, Fresno County Superintendent of Schools, Erroneously Sued Herein as Fresno County Office of Education, Defendant-Appellant.

No. 16-15372

United States Court of Appeals, Ninth Circuit.

Argued and Submitted February 17, 2017 San Francisco, California

Filed April 27, 2017

Michael Gary Woods (argued) and Timothy J. Buchanan, McCormick Barstow Sheppard Wayte & Carruth LLP, Fresno, California, for Defendant-Appellant.

Daniel M. Siegel (argued) and Kevin Brunner, Siegel & Yee, Oakland, California, for Plaintiff-Appellee.

Barbara L. Sloan (argued), Attorney; Margo Pave, Assistant General Counsel; Jennifer S. Goldstein, Associate General Counsel; P. David Lopez, General Counsel; Office of the General Counsel, Washington, D.C.; as and for Amicus Curiae Equal Employment Opportunity Commission.

Before: A. Wallace Tashima and Andrew D. Hurwitz, Circuit Judges, and Lynn S. Adelman,^** District Judge.

OPINION

ADELMAN, District Judge:

The plaintiff, Aileen Rizo, is an employee of the public schools in Fresno County. After discovering that the County pays her less than her male counterparts for the same work, she brought this action under the Equal Pay Act, 29 U.S.C. § 206(d), Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e-5, and the California Fair Employment and Housing Act, Cal. Gov. Code § 12940. When the County¹ moved for summary judgment, it conceded that it paid the plaintiff less than comparable male employees for the same work. However, it argued that this result was lawful because the pay differential was "based on any other factor other than sex," an affirmative defense to a claim under the Equal Pay Act. This other factor was prior salary, and the district court concluded that when an employer bases a pay structure "exclusively on prior wages," any resulting pay differential between men and women is not based on any other factor other than sex. Rizo v. Yovino , No. 1:14-cv-0423-MJS, 2015 WL 9260587, at *9 (E.D. Cal. Dec. 18, 2015). Based on this conclusion, the district court denied the County's motion for summary judgment.

The district court candidly recognized that its decision potentially conflicted with this court's decision in Kouba v. Allstate Insurance Co. , in which we held that prior salary can be a factor other than sex, provided that the employer shows that prior salary "effectuate[s] some business policy" and the employer uses prior salary "reasonably in light of [its] stated purpose as well as its other practices," 691 F.2d 873, 876–77 (9th Cir. 1982), and thus certified its decision for interlocutory appeal under 28 U.S.C. § 1292(b). We permitted that appeal and authorized the County to appeal from the order denying summary judgment.

We conclude that this case is controlled by Kouba . We therefore vacate the district court's order and remand with instructions to reconsider the County's motion for summary judgment.

I.

In 2009, the County hired the plaintiff as a math consultant, a position it classifies as management-level. When the County hired Rizo, it used a salary schedule known as "Standard Operation Procedure 1440" to determine the starting salaries of management-level employees. This schedule consists of twelve "levels," each of which has progressive "steps" within it. New math consultants receive starting salaries within Level 1, which has ten steps, with pay ranging from $62,133 at Step 1 to $81,461 at Step 10. To determine the step within Level 1 on which the new employee will begin, the County considers the employee's most recent prior salary and places the employee on the step that corresponds to his or her prior salary, increased by 5%.

Prior to being hired by Fresno County, the plaintiff worked as a math teacher at a middle school in Arizona. When she left that position, she was receiving a salary of $50,630 per year, plus an annual stipend of $1,200 for her master's degree. Adding 5% to the plaintiff's prior compensation resulted in a salary lower than Fresno County's Level 1, Step 1 salary. Thus, under Standard Operation Procedure 1440, the plaintiff's starting salary was set at the minimum Level 1 salary: $62,133. However, the County also paid the plaintiff a $600 stipend for her master's degree, so her total starting pay was $62,733 per year.

In July 2012, the plaintiff was having lunch with her colleagues when a male math consultant who had recently been hired informed her that he started on Step 9 of Level 1. The plaintiff subsequently learned that the other math consultants, all of whom were male, were paid more than she was. The plaintiff complained to the County about this disparity, but the County informed her that all salaries had been properly set under Standard Operation Procedure 1440.

Dissatisfied with the County's response, the plaintiff initiated this suit. The County moved for summary judgment, arguing that the plaintiff's salary, though less than her male colleagues', was based on "any other factor other than sex," namely, prior salary. The district court determined that, under the Equal Pay Act, prior salary alone can never qualify as a factor other than sex, reasoning that "a pay structure based exclusively on prior wages is so inherently fraught with the risk ... that it will perpetuate a discriminatory wage disparity between men and women that it cannot stand, even if motivated by a legitimate non-discriminatory business purpose." Rizo , 2015 WL 9260587, at *9. The court therefore denied the County's motion for summary judgment.

II.

Under the Equal Pay Act, the plaintiff has the burden of establishing a prima facie case of discrimination. Stanley v. Univ. of S. Cal. , 178 F.3d 1069, 1073–74 (9th Cir. 1999). "The Equal Pay Act creates a type of strict liability; no intent to discriminate need be shown." Maxwell v. City of Tucson , 803 F.2d 444, 446 (9th Cir. 1986) (internal quotation marks and citation omitted). Thus, to make out a prima facie case, the plaintiff must show only that he or she is receiving different wages for equal work. Hein v. Or. Coll. of Educ. , 718 F.2d 910, 916 (9th Cir. 1983).

"Once the plaintiff establishes a prima facie case, the burden of persuasion shifts to the employer to show that the wage disparity is permitted by one of the four statutory exceptions to the Equal Pay Act: ‘(i) a seniority system; (ii) a merit system; (iii) a system which measures earnings by quantity or quality of production; or (iv) a differential based on any other factor other than sex.’ " Maxwell , 803 F.2d at 446 (quoting 29 U.S.C. § 2069(d)(1)). "These exceptions are affirmative defenses which the employer must plead and prove." Kouba , 691 F.2d at 875.²

In the district court, the County conceded that the plaintiff had established a prima facie case under the Equal Pay Act, but asserted the affirmative defense that the pay differential was "based on any other factor other than sex." Because the County sought summary judgment on the basis of an affirmative defense on which it would bear the burden of proof at trial, it must show at the summary-judgment stage that "no reasonable trier of fact" could fail to find that it had proved that defense. Soremekun v. Thrifty Payless, Inc. , 509 F.3d 978, 984 (9th Cir. 2007). However, the issue that prompted this interlocutory appeal is purely one of law: whether the district court's conclusion that prior salary alone can never be a "factor other than sex" is correct.

In Kouba , the employer, Allstate Insurance, "compute[d] the minimum salary guaranteed to a new sales agent on the basis of ability, education, experience, and prior salary." 691 F.2d at 874. As result of this practice, on average, female agents made less than male agents. Id. at 875. The plaintiff alleged that Allstate's "use of prior salary caused the wage differential," and that therefore the differential violated the Equal Pay Act. Id. Allstate argued that, to the extent its use of prior salary "caused the wage differential," "prior salary constitute[d] a factor other than sex." Id. The district court rejected this argument, reasoning that (1) because so many employers paid discriminatory salaries in the past, the court would presume that a female agent's prior salary was based on her gender unless the employer presented evidence to rebut that presumption, and (2) absent such a showing, prior salary is not a factor other than sex. Id.

On appeal, we rejected the district court's interpretation of the Equal Pay Act. Id. at 876. We held that "the Equal Pay Act does not impose a strict prohibition against the use of prior salary," even though an employer could "manipulate its use of prior salary to underpay female employees." Id. at 878. However, we did not hold that prior salary automatically qualifies as a factor other than sex. Rather, we held that an employer could maintain a pay differential based on prior salary (or based on any other facially gender-neutral factor) only if it showed that the factor "effectuate[s] some business policy" and that the employer "use[s] the factor reasonably in light of the employer's stated purpose as well as its other practices." Id. at 876–77. We then noted that Allstate had offered "two business reasons for its use of prior salary" and directed the district court to evaluate those reasons on remand. Id. at 877.

The County has offered four business reasons for using Standard Operation Procedure 1440, under which starting salaries are based primarily on prior salary: (1) the policy is objective, in the sense that no subjective opinions as to the new employee's value enters into the starting-salary calculus; (2) the policy encourages candidates to leave their current jobs for jobs at the County, because they will always receive a 5% pay increase over their current salary; (3) the policy prevents favoritism and ensures consistency in application; and (4) the policy is a judicious use of taxpayer dollars. But, the district court did not evaluate whether these reasons...