Shannon v. Pay 'N Save Corp., 51117-9

CourtUnited States State Supreme Court of Washington
Writing for the CourtDURHAM; DOLLIVER, C.J., DORE, CALLOW, GOODLOE, JJ., and HAMILTON; BRACHTENBACH; PEARSON
Citation104 Wn.2d 722,709 P.2d 799
Parties, 54 Fair Empl.Prac.Cas. (BNA) 1502, 43 Empl. Prac. Dec. P 37,063 Iris SHANNON, individually and for all others similarly situated, Respondent, v. PAY 'N SAVE CORPORATION, a Washington corporation, Appellant.
Docket NumberNo. 51117-9,51117-9
Decision Date21 November 1985

Page 722

104 Wn.2d 722
709 P.2d 799, 54 Fair Empl.Prac.Cas. (BNA) 1502,
43 Empl. Prac. Dec. P 37,063
Iris SHANNON, individually and for all others similarly
situated, Respondent,
v.
PAY 'N SAVE CORPORATION, a Washington corporation, Appellant.
No. 51117-9.
Supreme Court of Washington,
En Banc.
Nov. 21, 1985.

[709 P.2d 802]

Page 723

Ryan, Swanson, Hendel & Cleveland, Michael R. Rayton, Thao Tiedt, Seattle, for appellant.

Salter, McKeehen & Rabine, James R.B. Salter, Seattle, for respondent.

DURHAM, Justice.

Pay 'N Save Corporation appeals from a judgment entered upon a jury verdict finding it liable, pursuant to RCW 49.60, for discriminating against Iris Shannon in employment because of her gender. Pay 'N Save contends that the trial court erred by: (1) submitting Shannon's theory of disparate impact to the jury, (2) allowing Shannon to introduce statistical evidence at trial, (3) refusing to find that a juror's statements constituted misconduct requiring a new trial, and (4) awarding Shannon $40,267 in attorney fees. Alternatively, Pay 'N Save argues that even if the trial court was justified in submitting the disparate impact theory to the jury, it misstated the theory in its jury instructions. Shannon cross-appeals contending that the trial court erred by denying her the injunctive relief of

Page 724

reinstatement and by refusing to allow her to recover expert witness fees. We agree with Pay 'N Save that the trial court's instructions misstated the law of disparate impact, and we reverse and remand for a new trial.

In 1966, Shannon began working as a receiving clerk for Ernst Hardware, a division of Pay 'N Save. Eight years later, she became the first woman promoted to the position of assistant manager at an Ernst store. 1 Between 1974 and 1979, Shannon served as assistant manager at four different Ernst stores. During her tenure as assistant manager, Shannon was evaluated annually by her store manager. Beginning in 1976, Ernst's store managers utilized a standardized form for evaluating assistant managers. Managers rated assistant managers on a scale from one to eight for qualities perceived by Ernst to be relevant to an employee's suitability for promotion. Those qualities evaluated ranged from involvement in community activities to proficiency in determining when to cut off inventory. In 1976, 1977 and 1978, Shannon received high ratings. In 1979, however, her rating plummeted and Shannon was informed by her district manager that she would never become a store manager. Upset by this evaluation, Shannon requested a transfer to another position. For lack of another opening close to her home, Shannon accepted a position as a receiving clerk.

The standardized evaluation form used to evaluate Shannon was developed pursuant to a consent decree entered into by Pay 'N Save in 1976. The consent decree evolved out of litigation instituted by a class of female Pay 'N Save employees who claimed that Pay 'N Save's promotion policies discriminated against them in violation of Title VII of the Civil Rights Act of 1964. The decree required Pay 'N Save to develop formal criteria for promotion to the department head category. Accordingly, Pay 'N

Page 725

Save developed a standardized employee evaluation form which it uses not only to evaluate an employee's suitability to become department head but also to evaluate his or her suitability to become store manager or assistant manager.

Pay 'N Save, however, does not rely solely on the evaluation form in determining promotions to the store manager level. After the evaluation form stage, the store manager meets with a district and a division manager to discuss the evaluation. All district managers then confer, revise the store manager's evaluations, and from these revised evaluations, identify candidates for promotion.

In 1980, Iris Shannon filed the action that is the subject of this appeal, claiming [709 P.2d 803] that Pay 'N Save violated RCW 49.60 2 by refusing to promote her to the position of store manager because of her gender. At trial, Shannon employed an expert in statistics to testify. The expert introduced statistical evidence to support Shannon's contention that there is little correlation between the result of a store manager's evaluation and an offer of promotion. The expert maintained that after the consent decree, Pay 'N Save no longer discriminated against women at the department head level, but had raised the plateau and now discriminated against women at the assistant and store manager level.

Although it did not employ an expert, Pay 'N Save introduced evidence that Shannon could not get along with subordinates, was dictatorial in her managerial style, and had to be suspended for a week in 1977 because of misconduct. In short, Pay 'N Save maintained that Shannon was not

Page 726

suitable to be a store manager.

The jury returned a verdict which awarded Shannon $20,000 in damages. The trial court then granted her $40,267 in attorney fees and $1,000 in punitive damages.

Both Pay 'N Save and Shannon made post-trial motions. Pay 'N Save moved for a new trial based upon juror misconduct. In Shannon's post-trial motion, she moved to amend her pleading to include the equitable relief of reinstatement. The trial court ordered Pay 'N Save to consider Shannon for promotion, but refused to order reinstatement. The court also denied Pay 'N Save's motion for a new trial. From the judgment entered by the trial court, Pay 'N Save appeals and Shannon cross-appeals.

Prior to evaluating Pay 'N Save's contentions on appeal, we first review some well-established principles of employment discrimination law.

Two theories, "disparate impact" and "disparate treatment," are available to a plaintiff attempting to prove discrimination in employment pursuant to RCW 49.60. Fahn v. Cowlitz Cy., 93 Wash.2d 368, 378, 610 P.2d 857, 621 P.2d 1293 (1980); see also Furnco Constr. Corp. v. Waters, 438 U.S. 567, 98 S.Ct. 2943, 57 L.Ed.2d 957 (1978). " 'Disparate treatment' ... is the most easily understood type of discrimination. The employer simply treats some people less favorably than others because of their race, color, religion, sex, or national origin." International Bhd. of Teamsters v. United States, 431 U.S. 324, 335 n. 15, 97 S.Ct. 1843, 1854 n. 15, 52 L.Ed.2d 396 (1977). To establish a prima facie case of employment discrimination under a "disparate treatment" theory, the plaintiff must show that: (1) he belongs to a protected class, (2) he applied and was qualified for a job for which the employer was seeking applicants, (3) he was rejected for the position, and (4) after his rejection the position remained open and the employer continued to seek qualified applicants. McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802, 93 S.Ct. 1817, 1824, 36 L.Ed.2d 668 (1973).

[T]he prima facie case "raises an inference of discrimination only because we presume these acts, if otherwise

Page 727

unexplained, are more likely than not based on the consideration of impermissible factors."

Texas Dep't of Comm'ty Affairs v. Burdine, 450 U.S. 248, 254, 101 S.Ct. 1089, 1094, 67 L.Ed.2d 207 (1981) quoting Furnco, 438 U.S. at 577, 98 S.Ct. at 2949.

Once the plaintiff establishes a prima facie case, the defendant must produce[709 P.2d 804] some evidence that the rejection of the plaintiff's application was due to a legitimate nondiscriminatory reason. Texas Dep't of Comm'ty Affairs v. Burdine, supra. The plaintiff then must be afforded the opportunity to show that the defendant's asserted justification was a mere pretext for discrimination. McDonnell Douglas Corp., 411 U.S. at 804, 93 S.Ct. at 1825. The plaintiff in a disparate treatment case retains the burden of proof throughout the trial. United States Postal Serv. Bd. of Governors v. Aikens, 460 U.S. 711, 103 S.Ct. 1478, 75 L.Ed.2d 403 (1983). He succeeds in meeting this burden by showing that a discriminatory reason more likely than not motivated the employer. Aikens, at 716, 103 S.Ct. at 1482.

Unlike disparate treatment, the disparate impact theory enables a plaintiff to address the consequences of seemingly objective employment practices by allowing the plaintiff to prevail in an employment discrimination suit without establishing discriminatory motive. Griggs v. Duke Power Co., 401 U.S. 424, 432, 91 S.Ct. 849, 854, 28 L.Ed.2d 158 (1971). Thus, a disparate impact analysis requires a plaintiff to prove: (1) a facially neutral employment practice, (2) falls more harshly on a protected class. International Bhd. of Teamsters, 431 U.S. at 336, 97 S.Ct. at 1854. Once the plaintiff establishes the prima facie case, the burden shifts to the defendant to show that the challenged requirement has a "manifest relationship" to the position in question. Griggs, 401 U.S., at 432, 91 S.Ct. at 854. If the employer meets this burden, the plaintiff may still prevail by showing that other less discriminatory alternatives can equally serve the employer's legitimate business requirements. Albemarle Paper Co. v. Moody, 422 U.S. 405, 425, 95 S.Ct. 2362, 2375, 45 L.Ed.2d 280 (1975); Fahn v. Cowlitz Cy., 93 Wash.2d 368, 380, 610 P.2d 857 (1980).

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Pay 'N Save maintains that the trial court misstated the law of disparate impact by presenting instructions 17 and 18 to the jury. We agree. Instruction 17 states:

In determining whether plaintiff has met her burden of proof of showing that defendant's promotional procedures disparately impact women Assistant Managers and favors male Assistant Managers for promotion to Store Manager, you are instructed that if the selection rate for women to Store Manager is less than four-fifths ( 4/5) or eighty percent (80%) of the rate for men, it is evidence that women are disparately impacted because of sex unless defendant can prove that promotional procedures are job related.

(Italics ours.)

This instruction is based on 29 C.F.R. § 1607.4D (1984), an Equal Employment Opportunity Commission (EEOC)...

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