Rose v. Wells Fargo & Co.

Citation902 F.2d 1417
Decision Date08 May 1990
Docket NumberNo. 88-15569,88-15569
Parties52 Fair Empl.Prac.Cas. 1430, 53 Empl. Prac. Dec. P 39,920, 116 Lab.Cas. P 56,312, 5 Indiv.Empl.Rts.Cas. 648 William ROSE, Jr.; Orie Reed, Plaintiffs-Appellants, v. WELLS FARGO & COMPANY, Defendant-Appellee.
CourtUnited States Courts of Appeals. United States Court of Appeals (9th Circuit)

Margaret Kemp-Williams, Chinello, Chinello, Shelton & Auchard, Fresno, Cal., for plaintiffs-appellants.

Eric K. Hansen, Jory, Peterson & Sagaser, Fresno, Cal., for defendant-appellee.

Appeal from the United States District Court for the Eastern District of California.

Before WALLACE, ALARCON and LEAVY, Circuit Judges.

LEAVY, Circuit Judge:

William Rose, Jr. and Orie Reed bring this action against their employer, Wells Fargo & Company (Wells Fargo), alleging they were discharged on the basis of age in violation of the Age Discrimination in Employment Act of 1967 (ADEA), 29 U.S.C. Secs. 621-634 (West 1985 & Supp.1990), and the California Fair Employment and Housing Act, Cal. Gov't Code Sec. 12941 (West Supp.1990). The plaintiffs also allege a state law claim for breach of the implied covenant of good faith and fair dealing. Rose and Reed appeal from the district court's orders granting summary judgment in favor of Wells Fargo. We affirm.

FACTS AND PROCEEDINGS

In February 1986, Wells Fargo purchased Crocker National Bank from Midland Bank and announced its plan to merge Crocker's banking operations with its own. The consolidated banking entity was to be known as Wells Fargo Bank, N.A. The proposed merger was the largest of its kind in history, affecting 15,000 Wells Fargo employees and 13,000 Crocker employees.

Following the merger announcement, Wells Fargo set about combining the two enterprises. Because Wells Fargo and Crocker were comparable in size and offered essentially the same types of banking services within the same geographic market, the merger meant that most duplicative job positions would be eliminated. Employees were told from the beginning the merger would mean the elimination of jobs and the displacement of employees. Job losses fell hardest on Crocker employees; nearly one fifth of the Crocker work force lost their jobs as a direct result of the merger.

Before the merger, fifty-three year old William Rose worked as a vice president in the Agricultural Unit of Crocker's Special Assets Division ("SAD") located in Fresno, California (the "Fresno Ag Unit"). He conducted appraisals and assisted in the management of agricultural properties which secured loans made by Crocker. Approximately seventy-five percent of the properties Rose worked on were assets of the Bracton Corporation, a subsidiary of Midland Bank. Rose had worked for Crocker for fifteen years and had received "Excellent" ratings in his last four job evaluations.

Orie Reed, also a Crocker vice president prior to the merger, was the manager of the Fresno Ag Unit. Fifty-six year old Reed managed problem agricultural loans and the properties which secured them. His primary responsibility, however, was to supervise the Fresno Ag Unit. Reed had worked for Crocker for twenty-seven years and consistently received high ratings in his most recent job evaluations.

The merger necessitated a consolidation of SAD with the comparable Wells Fargo office, the Loan Adjustment Department ("LAD"). On February 25, 1986, SAD's Executive Vice President, Richard Daniel, circulated a letter which assured his employees "there [was] no thought of reducing staff in [SAD]." Shortly before the The loss of the Bracton assets and the transfer of SAD's property management functions led to substantial staff reductions within SAD. Approximately half of the 153 pre-merger SAD employees lost their jobs as a result of the merger. Four of the eight SAD management employees, including Rose and Reed, were terminated. Reed and Rose learned on June 2, 1986, two days after the effective date of the acquisition, that they had been terminated due to job elimination.

merger, however, Wells Fargo announced that it would not manage the Bracton assets, which formerly had made up approximately sixty percent of the total assets managed by SAD. In addition, all of SAD's other property management functions were transferred to other units within Wells Fargo.

Employment decisions as to which jobs would be eliminated and as to who would fill the remaining positions was essentially left to the discretion of the managers of the various bank departments. Robert Walker, senior vice president of SAD, made the final recommendations regarding Rose's and Reed's termination. While some placement services were made available to Rose and Reed, they were not interviewed for, nor were they offered, a new position within the reorganized bank.

Rose and Reed thereafter filed this action against Wells Fargo alleging age discrimination under both federal and state law, and breach of the implied covenant of good faith and fair dealing. In October 1988, the district court granted Wells Fargo's separate motions for summary judgment on all three claims. After bringing an unsuccessful motion for reconsideration, Rose and Reed timely filed this appeal.

DISCUSSION
I. Federal Discrimination Claim

A grant of summary judgment is reviewed de novo. Palmer v. United States, 794 F.2d 534, 536 (9th Cir.1986). Viewing the evidence in a light most favorable to the non-moving party, the reviewing court must determine if there are any genuine issues of material fact and whether the law was correctly applied. Id. "Although summary procedures should be used prudently, 'particularly in cases involving issues of motivation or intent' in ADEA claims, such relief may nonetheless be appropriate." Id. (quoting Douglas v. Anderson, 656 F.2d 528, 535 (9th Cir.1981)).

Rose and Reed claim they were discriminated against on the basis of age in violation of ADEA, 29 U.S.C. Sec. 623(a)(1), which makes it unlawful "to fail or refuse to hire or to discharge any individual or otherwise discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's age." This prohibition applies to "individuals who are at least 40 ... but less than 70 years of age." 29 U.S.C. Sec. 631(a).

The shifting burden of proof applied to a Title VII discrimination claim also applies to claims arising under ADEA. Palmer, 794 F.2d at 537. The plaintiff must first establish a prima facie case of discrimination, which, for the purposes of summary judgment, "refers to the plaintiff's burden of 'producing enough evidence to permit the trier of fact to infer the fact at issue.' " Id. (quoting Texas Dep't of Community Affairs v. Burdine, 450 U.S. 248, 254 n. 7, 101 S.Ct. 1089, 1094 n. 7, 67 L.Ed.2d 207 (1981)). 1 Establishment of a prima facie case operates to shift the burden to the employer 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, 2784, 101 L.Ed.2d 827 (1988). If the employer "carries this burden of production, the plaintiff must prove by a preponderance of all the evidence in the case that the legitimate reasons offered by the defendant were a pretext for discrimination." Id. While the burden shifts, " '[t]he ultimate burden of persuading the trier of fact that the defendant ... discriminated against the plaintiff remains at all times with the plaintiff.' " Id. (quoting Burdine, 450 U.S. at 253, 101 S.Ct. at 1093.

A plaintiff alleging discrimination under ADEA may proceed under two theories of liability: disparate treatment or disparate impact. Palmer, 794 F.2d at 536. Proof of disparate treatment requires a showing that the employer treats some people less favorably than others because of their age. International Bhd. of Teamsters v. United States, 431 U.S. 324, 335 n. 15, 97 S.Ct. 1843, 1854-55 n. 15, 52 L.Ed.2d 396 (1977). In contrast, discriminatory motive or intent need not be shown under a disparate impact theory, which challenges facially neutral employment practices which have a discriminatory impact. Id. However, under the latter theory the plaintiff must actually prove the discriminatory impact at issue, rather than merely an inference of discriminatory impact. Palmer, 794 F.2d at 536.

A. Disparate Treatment

Rose and Reed claim Wells Fargo refused to retain them during the work force reduction because of their age. An employee may establish a prima facie case of age discrimination under the disparate treatment theory by showing 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. Id. at 537 (quotation omitted).

Both Rose and Reed established that they are members of the protected class, that they were performing their jobs satisfactorily, and that they were discharged. The district court dismissed their disparate treatment claims on the grounds they

failed to show actual discrimination under the disparate treatment theory because their entire unit was eliminated during the merger as Wells Fargo did not acquire the property owned by Crocker which was managed by this unit. Thus, these plaintiffs were not replaced by anyone, let alone younger persons with similar qualifications.

The plaintiffs argue that proof of replacement is not required as part of their prima facie case where the termination results from a reduction in work force.

We have held that the failure to prove replacement by a younger employee is "not necessarily fatal" to an age discrimination claim where the discharge results from a general reduction in the work force due to business conditions. See id. (citing Haydon v. Rand Corp., 605 F.2d 453, 454 n. 1 (9th Cir.1979) (per curiam)). Most circuits are in accord and require instead that the plaintiff show...

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