Charles Merrick v. Hilton Worldwide, Inc.
2017 U.S. App. LEXIS 15374
| 9th Cir. | 2017Background
- Charles Merrick, age 60, was Director of Property Operations at the Hilton La Jolla Torrey Pines Hotel with ~19 years at the property; he was terminated in July 2012 as part of a corporate reduction-in-force (RIF).
- Hilton issued a corporate mandate to reduce payroll 7–10%; local managers (General Manager, HR Director, Finance Director) reviewed 29 managers and recommended eliminating Merrick’s position because his salary met the required savings, his role was viewed as low guest-impact and not revenue generating, and some capital-project duties had been shifted to an owner-affiliate (Remington).
- After the RIF, Merrick’s duties were assumed in part by Assistant Director Michael Kohl and outsourced work; Merrick sought a transfer to Kohl’s position but was refused and was given a list of open positions.
- Merrick sued under California’s FEHA for age discrimination (plus related claims); the district court granted summary judgment for Hilton; Merrick appealed only the age discrimination claims.
- The Ninth Circuit applied the McDonnell Douglas burden-shifting framework, concluded Merrick established a prima facie case (RIF context and continued need for his skills), but held Hilton offered legitimate nondiscriminatory reasons and Merrick failed to raise a genuine dispute of pretext.
Issues
| Issue | Merrick's Argument | Hilton's Argument | Held |
|---|---|---|---|
| Whether Merrick established a prima facie age-discrimination claim in a RIF | He was over 40, performing satisfactorily, discharged, and his duties continued (Kohl assumed duties) so circumstances infer discrimination | Merrick was not "replaced" and RIF eliminated positions for nondiscriminatory business reasons | Court: Prima facie case established by showing duties continued and inference of discrimination in RIF context |
| Whether Hilton articulated legitimate, nondiscriminatory reasons for the layoff | N/A (burden shifts to employer) | Eliminating Merrick’s high salary would meet RIF target with one layoff; property operations viewed as low guest-impact/non-revenue; other departments understaffed | Court: Hilton met its burden with individualized, nondiscriminatory reasons |
| Whether Merrick raised a triable issue of pretext | Pointed to (1) refusal to transfer him, (2) alleged mischaracterization of duties/performance, (3) deviation from RIF guidelines and failure to meet payroll reduction target | Decisions reflected business judgments; transfers were available for open positions; managers considered tenure on spreadsheet; payroll shortfall does not show discriminatory motive | Court: Evidence insufficient to permit a reasonable jury to infer age was a substantial motivating factor; summary judgment affirmed |
| Whether derivative common-law and prevention-of-discrimination claims survive absent FEHA violation | They depend on FEHA claim | They fail if FEHA claim fails | Court: Derivative claims fail with the FEHA claim |
Key Cases Cited
- McDonnell Douglas Corp. v. Green, 411 U.S. 792 (U.S. 1973) (burden-shifting framework for discriminatory treatment claims)
- Guz v. Bechtel Nat’l, Inc., 24 Cal.4th 317 (Cal. 2000) (application of McDonnell Douglas and need for individualized reasons in RIFs)
- Wallis v. J.R. Simplot Co., 26 F.3d 885 (9th Cir. 1994) (employees laid off in RIFs may not be literally replaced; other evidence can give rise to inference of discrimination)
- Coleman v. Quaker Oats Co., 232 F.3d 1271 (9th Cir. 2000) (continuing need for plaintiff’s skills can establish prima facie case in RIF)
- Diaz v. Eagle Produce Ltd. P’ship, 521 F.3d 1201 (9th Cir. 2008) (employer must provide individualized reasons in RIF; deviation from policy may bear on pretext)
- St. Mary’s Honor Center v. Hicks, 509 U.S. 502 (U.S. 1993) (proof that employer’s stated reasons are false may support inference of discrimination)
- Nidds v. Schindler Elevator Corp., 113 F.3d 912 (9th Cir. 1996) (plaintiff must produce sufficiently probative evidence of pretext)