Paup v. Gear Products, Inc., No. 07-5164 (10th Cir. June 19, 2009); EEOC v. Maricopa County, No. 08-15403 (9th Cir. June 18, 2009)

By Paul Mollica

One day after the Gross decision breaks, the Tenth Circuit begins laying the groundwork for the next assault on ADEA causation, albeit by way of an unpublished decision. In the Ninth Circuit, the EEOC gets out from under attorneys’ fees sanctions in another non-precedential decision.

Paup v. Gear Products, Inc., No. 07-5164 (10th Cir. June 19, 2009):  There plaintiffs challenge under the ADEA their selection in a sectional reduction in force, supposedly based on a scoring process (the “Overview Matrix”) designed to identify the weakest There (out of eight) employees.  The employees all lost in the district court on summary judgment. 

On appeal the Tenth Circuit resurrects the claims of two plaintiffs, while affirming the summary judgment of the third on judicial estoppel grounds.  The case produces an unsigned majority opinion, and a separate concurring and dissenting opinion by Judge Hartz. (Judge Hartz’s opinion agrees, in a separate analysis, with the decision to reverse summary judgment on two of the claims, and urges remand of the third as well for the district court to reweigh the estoppel defense.)

The judicial estoppel issue was based on one plaintiff’s failure to list her lawsuit as an asset in her Chapter 7 bankruptcy petition, signed under oath, that specifically requested a list of “all suits and administrative proceedings to which the debtor is or was a party.”  The panel majority holds that the district court did not err in imposing estoppel where the employee failed to explain why she did not list the action, where the size and recency of the filing made it improbable that the debtor overlooked the matter, that the employee obtained the benefit of the inaccurate filing by receiving a “no asset” discharge, and that the debtor’s subsequent self-disclosure of the lawsuit came too late to alleviate any prejudice to the creditors.

In the course of a total 49 pages (and who ever said that unpublished opinions weren’t substantive?), both opinions canvass the record for the remaining two plaintiffs and find that the defendant failed, suspiciously, to substantiate how the factors in the RIF were weighed or (more importantly) who weighed them.

“First, the only putative evidence the company cites in support of its explanations is the Overview Matrix. But, as we’ve noted, it appears this document was prepared by Ms. Bond in response to this very lawsuit. Even assuming its admissibility, the circumstances surrounding its creation could surely cause a reasonable factfinder to view it with a degree of skepticism. . .

“Second, the Overview Matrix also fails to name any of the decision makers who purportedly made the decisions it describes, speaking instead as if all decisions were made only by an impersonal ‘we.’ A crucial factor in the termination process, then, is left a mystery, and we are provided no justification for why the company was unable or unwilling to name names. This fact, too, casts a shadow of doubt over Gear Products explanations. . . .”

“Third, the company was unable to supply any individual whose testimony might mend these infirmities. Quite the opposite. When Gear Products own Rule 30(b)(6) corporate representative, Mr. Simmons, was directed to portions of the Overview Matrix, he disavowed personal knowledge of the facts it contained. See App. at 318, 324. And when specifically asked whether anyone in the company might know whether discussions referenced in the Overview Matrix actually happened, or whether someone might be able to identify the relevant decision makers the Overview Matrix leaves unnamed, he answered in the negative. Id. at 324. . . .”

Nevertheless, especially in light of Gross, there is disquieting aside about the application of the pretext method of proof to ADEA cases at pp. 26-27:

“[We do not mean to suggest that a company can never change its mind, even in the midst of a RIF process, about the factors that it wishes to consider in deciding whom to terminate. Neither do we suggest that a company may not have more than one legitimate reason for terminating an employee, or that such reasons may not be inconsistent. At trial, the question before the jury will be whether Gear Products engaged in age discrimination, and a defendant is normally free to pursue inconsistent lines of defense to refute the conclusion that its actions were motivated by ageism. It is thus conceivable that at trial Gear Products will argue, and even argue successfully, that, whether it fired employees for poor performance or for expendability, it did so without age-based animus.

“The fact remains, however, that we are now at summary judgment, obliged to apply the McDonnell Douglas framework. And we have repeatedly held that employees may meet their summary judgment burden of showing pretext under McDonnell Douglas by demonstrating that their employer’s proffered business justifications are so incoherent, weak, inconsistent, or contradictory that a rational factfinder could conclude the reasons were unworthy of belief. This showing of pretext, of reason to disbelieve, by definition, “does not require a plaintiff to offer
any direct evidence of actual discrimination.” Timmerman v. U.S. Bank, N.A., 483 F.3d 1106, 1113 (10th Cir. 2007). For this and other reasons, some have criticized McDonnell Douglas as improperly diverting attention away from the real question posed by the ADEA – whether age discrimination actually took place – and substituting in its stead a proxy that only imperfectly tracks that inquiry. See, e.g., Wells v. Colo. Dept. of Transp., 325 F.3d 1205, 1221-28 (10th Cir. 2003) (Hartz, J., concurring); MacDonald v. E. Wyo. Mental Health Ctr., 941 F.2d 1115, 1122-23 (10th Cir.1991) (Seth, J., concurring); see generally Timothy M. Tymkovich, The Problem with Pretext, 85 Denv. U. L. Rev. 503 (2008). But McDonnell Douglas of course remains binding on us.” [Emphasis added.]

So we may be on the march to the U.S. Supreme Court, finally, on the question of whether McDonnell Douglas applies under the ADEA, a point on which yesterday’s five-justice majority in Gross appeared uncertain.  (At fn. 2, the Court observes that it “has not definitively decided whether the evidentiary framework of McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973), utilized in Title VII cases is appropriate in the ADEA context.”)

EEOC v. Maricopa County, No. 08-15403 (9th Cir. June 18, 2009):  On remand from a Ninth Circuit decision affirming summary judgment, the defendant won attorneys’ fees and costs in the district court as a sanction under 28 U.S.C. § 1927 and the court’s inherent powers.  In a brief, unreported opinion, the district court reverses:

“We first note that although the majority of an earlier panel of this court concluded that summary judgment was appropriately granted, Judge Reinhardt’s dissent raised valid concerns and illustrated the complexities of the matter. See EEOC v. Maricopa County, No. 05-15403, 220 Fed. Appx. 733, 2007 WL 570424 (9th Cir. Feb. 20, 2007). Based on our review of the record, including the details of Anderson’s deposition testimony, along with the factors raised in the earlier dissent, we conclude that the district court abused its discretion when it determined that the EEOC pursued its claims in bad faith and that its position was frivolous. The EEOC’s arguments were ultimately unsuccessful. Nonetheless, a weak case is not tantamount to a frivolous case.”

The Ninth Circuit finds the award an abuse of discretion and tosses it entirely.