Dennis V. O‘DAY, Plaintiff-Appellant, v. MCDONNELL DOUGLAS HELICOPTER COMPANY, a Foreign Corporation, Defendant-Appellee.
Nos. 92-15625, 92-16512
United States Court of Appeals, Ninth Circuit
March 26, 1996
Argued and Submitted Feb. 7, 1994. Submission Withdrawn April 12, 1994. Submission Further Suspended Nov. 8, 1994. Resubmitted June 9, 1995.
Upon careful review of the issues and arguments presented in this appeal, we agree with the district court‘s interpretation of the law regarding the Feres doctrine and its application to the facts of the present case. Uhl v. Swanstrom, 876 F.Supp. at 1561-70. We find it unnecessary to modify or to elaborate upon the district court‘s thorough analysis. Accordingly, the judgment of the district court is affirmed. See 8th Cir. R. 47B.
Tibor Nagy, Jr., Snell & Wilmer, Tucson, Arizona, for the defendant-appellee.
Robert J. Gregory, Attorney, Equal Employment Opportunity Commission, Washington, D.C., for amicus Equal Employment Opportunity Commission, on behalf of the plaintiff-appellant.
Opinion by Judge KOZINSKI; Partial Concurrence and Partial Dissent by Judge FLETCHER.
KOZINSKI, Circuit Judge.
We consider whether an employer found to have violated the Age Discrimination in Employment Act,
I
On June 8, 1990, Dennis O‘Day was denied a promotion to the position of Lead Engineer at the McDonnell Douglas Helicopter Company‘s plant in Mesa, Arizona. One month later, he was laid off as part of a general workforce reduction. O‘Day was 46 years old, had worked for the company for 14 years, and was convinced he had been denied the promotion and laid off because of his age.
After first exhausting his administrative remedies with the Equal Employment Opportunity Commission, O‘Day filed this lawsuit against McDonnell Douglas challenging the promotion denial and layoff. He states four causes of action: (1) discrimination in employment under the Age Discrimination in Employment Act (ADEA),
The evening after he was denied the promotion, O‘Day returned to the plant and searched his supervisor‘s office. Ostensibly, he was looking for his own personnel file (to which access was restricted), but while he was rummaging through his supervisor‘s desk, O‘Day came across other documents he found interesting, including his supervisor‘s promotion recommendations and a handwritten list ranking employees for layoff (a so-called “totem” list). These documents O‘Day found in a file that was clearly not meant for general inspection. Not only was the file kept in a closed drawer in his supervisor‘s desk, but it contained notes and memoranda about sensitive personnel matters and was prominently marked “personal/sensitive.” Undaunted, O‘Day photocopied the handwritten “totem” list along with several other documents, and later showed them to another employee who had been slated for layoff.2
It was not until after discovery began that McDonnell Douglas learned of O‘Day‘s misconduct. McDonnell Douglas immediately converted O‘Day‘s “layoff” status to “terminated,” and filed for summary judgment on the grounds that O‘Day‘s misconduct absolved the company of all liability for its alleged discrimination. The district court assumed for purposes of this motion that McDonnell Douglas had in fact discriminated against O‘Day, and concluded there was no genuine issue of material fact that McDonnell Douglas would have fired O‘Day had it learned of the misconduct earlier. Rejecting O‘Day‘s contention that his conduct could not legally form the basis for discharge because it was protected activity under the ADEA‘s “opposition clause,”
On appeal, we consider three issues: 1) whether the after-acquired evidence of O‘Day‘s misconduct absolves McDonnell
II
After one false start, see Milligan-Jensen v. Michigan Tech. Univ., 975 F.2d 302 (6th Cir.1992), cert. granted, 509 U.S. 903 (1993), cert. dismissed, --- U.S. ----, 114 S.Ct. 22, 125 L.Ed.2d 773 (1993), the Supreme Court has provided some much-needed guidance as to how after-acquired evidence of employee wrongdoing should be treated in employment discrimination cases.3 In McKennon v. Nashville Banner Publishing Co., --- U.S. ----, 115 S.Ct. 879, 130 L.Ed.2d 852 (1995), the Court considered a factual scenario very similar to that presented here. A longtime employee of the Banner Publishing Company sued the company claiming she was discharged because of her age in violation of the ADEA. During her deposition, she admitted that she had “copied several confidential documents bearing upon the company‘s financial condition,” and that she had taken these documents as “insurance” in case she was ever discharged. Id. at ----, 115 S.Ct. at 883. Banner asserted that this misconduct, which according to company policy was grounds for discharge, absolved the company of all liability for its unlawful discrimination.
The Supreme Court held that if an employer discharges an employee for a discriminatory reason, later-discovered evidence that the employee could have been discharged for a legitimate reason does not immunize the employer from liability. Id. at ----, 115 S.Ct. at 884-85. Reasoning that “a violation of the ADEA cannot be altogether disregarded,” id. at ----, 115 S.Ct. at 884, the Court held that after-acquired evidence of an employee‘s wrongdoing bears on the specific remedy to be ordered. Id. at ----, 115 S.Ct. at 886.
McKennon did not explicate how after-acquired evidence should be treated in every situation, leaving this issue to “be addressed by the judicial system in the ordinary course of further decisions.” Id. The Court did hold, however, that after-acquired evidence of wrongdoing generally limits an employee‘s remedy in three significant ways. If an employer discovers that the plaintiff committed an act of wrongdoing and can establish that the “wrongdoing was of such severity that the employee in fact would have been terminated on those grounds alone if the employer had known of it at the time of the discharge,” id. at ----, 115 S.Ct. at 886-87, the employer does not have to offer reinstatement or provide front pay, and only has to provide backpay “from the date of the unlawful discharge to the date the new information was discovered,” id. at ----, 115 S.Ct. at 886.
McKennon places the burden of proof with respect to this issue on the employer, carefully articulating that the employer must establish not only that it could have fired an employee for the later-discovered misconduct, but that it would in fact have done so. Id.; accord Reed v. AMAX Coal Co., 971 F.2d 1295, 1298 (7th Cir.1992). This burden comports with the well-established rule in mixed-motive cases, where the burden rests on the employer to prove by a preponderance of the evidence that it would have discharged the employee (or taken whatever adverse action is at issue) regardless of its discriminatory motive. See Price Waterhouse v. Hopkins, 490 U.S. 228, 258, 109 S.Ct. 1775, 1794-95, 104 L.Ed.2d 268 (1989). The inquiry focuses on the employer‘s actual employment practices, not just the standards established in its employee manuals, and reflects a recognition that employers often say they will discharge employees for certain misconduct while in practice they do not. As the Supreme Court stated in Price Waterhouse, “proving that the same decision would have been justified ... is not the same as proving
McKennon left open whether the preponderance of the evidence standard applicable in mixed-motive cases also applies in the after-acquired evidence context. Nowhere in McKennon does the Supreme Court suggest that employers bear a particularly heavy burden in this context; throughout the opinion the Court refers only to what employers must “establish.” Relying on our decision in Nanty v. Barrows Co., 660 F.2d 1327, 1333 (9th Cir.1981), O‘Day nevertheless argues that we should require McDonnell Douglas to come forward with clear and convincing evidence that it would have discharged him for his misconduct. This we decline to do.
Nanty held that an employer who had an illegal motive for an employment decision could limit the employee‘s remedy by providing clear and convincing evidence that it would have made the same decision apart from the illegal motive. Id. The clear-and-convincing standard was thoroughly rejected in Price Waterhouse, however; there a majority of the Supreme Court held that an employer who had an illegal motive for an employment decision could avoid liability outright if it showed by only a preponderance of the evidence that it would have made the same decision apart from the illegal motive. 490 U.S. at 258, 109 S.Ct. at 1794-95 (plurality opinion); id. at 259-60, 109 S.Ct. at 1795-96 (White, J., concurring); id. at 261, 109 S.Ct. at 1796-97 (O‘Connor, J., concurring). By enacting the
The dissent argues that Price Waterhouse was a mixed-motive case and that “[t]he Supreme Court in McKennon emphasized that mixed-motive cases are not applicable in the after-acquired evidence context, where ‘the case comes to [the court] on the express assumption that an unlawful motive was the sole basis for the firing.’ ” Dissent at 766-767 (quoting McKennon, --- U.S. at ----, 115 S.Ct. at 885). This overlooks the reason we are now considering the standard of proof issue; the Supreme Court did not address it in McKennon. The issue there was whether after-acquired evidence could defeat liability outright, or merely limit the employee‘s remedy. Of course mixed-motive cases don‘t bear on that question. As the Court explained in McKennon, it had taken the view in Mount Healthy City Bd. of Educ. v. Doyle, 429 U.S. 274, 97 S.Ct. 568, 50 L.Ed.2d 471 (1977), a mixed-motive case, that an employer could defeat liability outright, if it showed that it had a legitimate motive for an employment action, not only an illegitimate one. McKennon, --- U.S. at ----, 115 S.Ct. at 885. The Mt. Healthy Court had reasoned that it would be difficult and unnecessary to untangle the impermissible from the permissible motives. Id. This reasoning couldn‘t possibly apply in the McKennon context, however, for precisely the reason the Court there gave: In an after-acquired evidence case, the employer‘s actual motive for taking the employment action is clear and illegal. Id. Taken in context, the Court‘s language in McKennon gives not the slightest indication that Price Waterhouse is inapplicable to the issue of the employer‘s standard of proof at the remedy stage of an after-acquired evidence case.
Our dissenting colleague also observes that the employer in a mixed-motive case has acted from a legitimate motive as well as an illegitimate one, whereas the employer in an after-acquired evidence case has acted only from an illegitimate motive; according to the
We therefore decline to apply the Nanty standard, and instead take our cue from Price Waterhouse and the
III
We consider next whether McDonnell Douglas met its burden of proof at summary judgment. The district court found that McDonnell Douglas had produced sufficient evidence to prevail on its after-acquired evidence defense, and granted summary judgment because O‘Day came forward with no evidence to refute that showing. We review the grant of summary judgment de novo, and entertain every reasonable inference in favor of the non-moving party. Maffei v. Northern Ins. Co., 12 F.3d 892, 895-96 (9th Cir.1993).
As evidence that O‘Day‘s misconduct would have resulted in his immediate discharge, McDonnell Douglas introduced the sworn affidavit of Olinda Willis, a “Human Resources Representative” for the division in which O‘Day worked. Willis testified that “[h]ad [McDonnell Douglas] been aware of Mr. O‘Day‘s conduct before his layoff, he would have been terminated immediately.” CR 14, exh. 6, at 1. Willis also testified that O‘Day committed two “Group I” infractions: “Theft or unauthorized removal from premises of Company property or property of others” and “[d]eliberate or negligent destruction, damage or misuse of Company property or property of others.” Id. at 1-2 (emphasis in original). Under McDonnell Douglas’ Company Rules, Group I rule infractions “are extremely serious and will normally result in
O‘Day contends that this affidavit does not carry McDonnell Douglas’ burden because it is “self-serving” and “speculative.” He has a point: Working from hindsight, and given the opportunity to limit the backpay and other remedies it might otherwise have to provide, an employer has a strong incentive not only to discover previously undisclosed wrongdoing on the part of the plaintiff, but also to conclude that that conduct would in fact have resulted in the plaintiff‘s immediate discharge. Cf. Smallwood, 728 F.2d at 616 (district court felt “entitled to be ... skeptical of after-the-fact decisions as to what the defendant would have done“). But the fact that Willis’ testimony might be thoroughly impeached does not render it incompetent, and McDonnell Douglas is entitled to rely on sworn affidavits from its employees in proving that it would have discharged O‘Day for the alleged misconduct. Id. at 623 (circuit court would weigh employer‘s averments “by the same standard as other testimony“). We could hardly require employers in these cases to come forward with proof that they discharged other employees for the precise misconduct at issue (though such evidence would no doubt be helpful to their case), as often the only proof an employer will have is that adduced in this case—a company policy forbidding the conduct and the testimony of a company official that the conduct would have resulted in immediate discharge. Compare Reed, 971 F.2d at 1298 (“AMAX did not, for instance, provide proof that other employees were fired in similar circumstances.“) with Washington, 969 F.2d at 256-57 (uncontradicted affidavit by employer is enough).
This does not mean that employers can prevail based only on bald assertions that an employee would have been discharged for the later-discovered misconduct. In this regard, we find it significant that Willis’ testimony is corroborated both by the company policy, which plausibly could be read to require discharge for the conduct at issue here, and by common sense. There is nothing inherently incredible about McDonnell Douglas asserting that it would discharge an employee, even an employee with a spotless record, for sneaking into his supervisor‘s office, stealing sensitive documents pertaining to employment matters, and showing them to one of the very people affected by the documents. Cf. Bonger v. American Water Works, 789 F.Supp. 1102, 1107 (D.Colo.1992).
O‘Day offers no evidence to rebut Olinda Willis’ affidavit;5 indeed, in his response to McDonnell Douglas’ motion for summary judgment, O‘Day does not contest that he committed the wrongdoing or that he would have been discharged for it.6 Instead, O‘Day argues that McDonnell Douglas could not legally have discharged him for his misconduct—and thus could not point to his wrongdoing as a bar to backpay and other remedies under McKennon—because he was engaging in activity protected from retaliation under the ADEA‘s “opposition clause,”
O‘Day claims that his conduct—stealing sensitive personnel documents—was protected activity under section 623(d) because his purpose was to preserve evidence for his
Section 623(d) is the ADEA equivalent of the anti-retaliation provision of
We have previously adopted a balancing test for determining whether an employee‘s conduct constitutes “protected activity” under Title VII, and here adopt the same balancing test for retaliation claims under the ADEA. The court must balance “the purpose of the Act to protect persons engaging reasonably in activities opposing ... discrimination, against Congress’ equally manifest desire not to tie the hands of employers in the objective selection and control of personnel.” Wrighten v. Metropolitan Hospitals, Inc., 726 F.2d 1346, 1355 (9th Cir.1984) (quoting Hochstadt v. Worcester Foundation, 545 F.2d 222, 231 (1st Cir.1976)). An employee‘s opposition activity is protected only if it is “reasonable in view of the employer‘s interest in maintaining a harmonious and efficient operation.” Silver v. KCA, Inc., 586 F.2d 138, 141 (9th Cir.1978); accord Jefferies, 615 F.2d at 1036 (activity must be “reasonable in light of the circumstances“).
We strike the balance here in favor of McDonnell Douglas. O‘Day committed a serious breach of trust, not only in rummaging through his supervisor‘s office for confidential documents, but also in copying those documents and showing them to a co-worker. Like any employer, McDonnell Douglas has a strong interest in maintaining employee morale, and in discouraging this sort of behavior. To be sure, O‘Day also has a legitimate interest in preserving evidence of McDonnell Douglas’ unlawful employment practices, but that doesn‘t explain why he showed the purloined documents to a co-worker who had been slated for lay-off, or why he felt compelled to preserve evidence of McDonnell Douglas’ lay-off decisions. At the time he stole the “totem” list, O‘Day had only been denied a promotion; he had not been laid off, nor had he been given any indication that he would be.
In balancing an employer‘s interest in maintaining a “harmonious and efficient” workplace with the protections of the anti-discrimination laws, we are loathe to provide employees an incentive to rifle through confidential files looking for evidence that might come in handy in later litigation. The opposition clause protects reasonable attempts to contest an employer‘s discriminatory prac-
O‘Day was not engaged in protected activity under the ADEA, and could legally be discharged for his misconduct. As O‘Day has offered no evidence to controvert McDonnell Douglas’ showing that it would in fact have done so, we affirm the grant of summary judgment in favor of McDonnell Douglas on its after-acquired evidence defense.
But that is not the end of the matter. The district court assumed for the purposes of McDonnell Douglas’ summary judgment motion that O‘Day had carried his burden of establishing a violation of the ADEA, but held that the after-acquired evidence of O‘Day‘s misconduct was a complete bar to relief under the ADEA. Under McKennon, however, O‘Day would be entitled to some remedy for the discrimination. If O‘Day prevails on his discrimination claim on remand, he would at the very least be entitled to backpay from the date of his wrongful termination to the date that McDonnell Douglas learned of his wrongdoing, as well as any other remedies not precluded under McKennon.
IV
Based on its conclusion that O‘Day was not entitled to any relief, the district court awarded McDonnell Douglas attorneys’ fees under
AFFIRMED IN PART; REVERSED IN PART; REMANDED.
FLETCHER, Circuit Judge, concurring in part and dissenting in part.
I concur in that portion of the majority opinion that reverses the district court‘s grant of summary judgment to McDonnell Douglas on the grounds that after-acquired evidence barred O‘Day from obtaining any remedy for his employer‘s alleged discrimination. I dissent from the remainder of the opinion because it is entirely advisory, substantively wrong, and does violence to our circuit‘s precedents.
The district court granted summary judgment in favor of McDonnell Douglas because it reasoned that even if it were assumed that McDonnell Douglas fired O‘Day on account of his age, the company would have fired him anyway for wrongfully acquiring and disseminating confidential company information. As the majority recognizes, this analysis was flawed. Under McKennon v. Nashville Banner Publishing Co., --- U.S. ----, 115 S.Ct. 879, 130 L.Ed.2d 852 (1995), after-acquired evidence of an employee‘s wrongdoing is not a ground for avoiding liability under the anti-discrimination laws if the employer initially terminated the employee for a discriminatory motive. The evidence‘s only benefit to the employer is to limit the extent of the remedy.
Whether McDonnell Douglas terminated O‘Day because of his age is an issue that has yet to be litigated. The majority nonetheless determines that if McDonnell Douglas were
The most troubling portion of the majority‘s advisory opinion is its attempt to decide that the employer prevails at the remedy stage if it proves by a preponderance of the evidence that it would have fired the employee for his misconduct that came to light after the initial firing. The majority departs from the governing precedent of this circuit by incorrectly concluding that an intervening Supreme Court decision has rejected that precedent.
The governing precedent is Nanty v. Barrows Co., 660 F.2d 1327 (9th Cir.1981), which was essentially a straightforward disparate-treatment case at the liability stage. Nanty, an Apache, applied for a job as a furniture delivery truck driver with the Barrows Company. When Nanty arrived at Barrows’ offices to apply, he was told—before providing any information to the company—that the job had been filled. Three days later, the company hired two Caucasian drivers. This court held that Nanty had established a prima facie case of discrimination as required by the first step of the analytic framework established in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 93 S.Ct. 1817, 36 L.Ed.2d 668 (1973). Because Barrows “totally failed” to articulate any legitimate, nondiscriminatory reason for rejecting Nanty, his “prima facie showing [was] sufficient to meet his ultimate burden of proving unlawful discrimination“. 660 F.2d at 1332.
Barrows then argued that Nanty was not as qualified as the drivers it actually hired, so it would not have hired him even if it had not discriminated. Therefore, it argued, it should not be enjoined to hire Nanty despite his proof that Barrows had discriminated. Because Barrows had summarily rejected Nanty before he provided any information to the company, any evidence regarding his qualifications was after-acquired evidence. 660 F.2d at 1332 (“Barrows knew nothing about Nanty at the time of the rejection.“). The court relied on two Ninth Circuit cases, League of United Latin American Citizens v. City of Salinas Fire Dept., 654 F.2d 557 (9th Cir.1981), and Marotta v. Usery,1 629 F.2d 615 (1980), and one D.C. Circuit case, Day v. Mathews,2 530 F.2d 1083 (1976), for
the proposition that once a plaintiff has proved unlawful discrimination, the employer must show by clear and convincing evidence that the same employment decision would have been made even absent the discrimination.3 The rationale of these cases is that because the defendant‘s “unlawful acts have made it difficult to determine what would have transpired if all parties had acted properly“, 660 F.2d at 1333 (quoting League, 654 F.2d at 559), a high burden of proof should be assigned to the wrongdoing defendant.
Price Waterhouse v. Hopkins, 490 U.S. 228, 109 S.Ct. 1775, 104 L.Ed.2d 268 (1989), unlike Nanty, was a mixed-motive employment discrimination case. Six members of the Court, in three separate opinions, held that “when a plaintiff ... proves that [illegal discrimination] played a motivating part in an employment decision, the defendant may avoid a finding of liability ... by proving by a preponderance of the evidence that it would have made the same decision” in the absence of the discrimination. Id. at 258 (opinion of Brennan, J.). The Court overruled the D.C. Circuit‘s holding that the employer must make its showing by clear and convincing evidence in order to avoid liability.
Congress disagreed with the result in Price Waterhouse and enacted Section 107 of the
The majority in this case, noting that McKennon did not specify what standard of proof the employer must meet in an after-acquired-evidence case at the remedy stage, looks at both Nanty and Price Waterhouse but chooses the preponderance standard imposed in the latter, reasoning that the clear-and-convincing standard imposed by Nanty has been “thoroughly rejected” by Price Waterhouse. It does so by concluding that Nanty must have been overruled by the holding in Price Waterhouse (a mixed-motive case) that a defendant employer who has been shown to have acted at least in part from an illegally discriminatory motive need only prove by a preponderance of the evidence that the same action would have been taken on the basis of the non-discriminatory motive alone.
The blurring of Nanty and Price Waterhouse leads to mischief. In Price Waterhouse, the defendant argued that its employment decision had actually been made on the basis of multiple motives, and the Court held that if it could prove that, and if one of those actual multiple motives was a legitimate non-discriminatory one, the defendant could avoid liability. (Of course, after the 1991 amendments, the defendant could only limit the plaintiff‘s remedies). In Nanty, by contrast, the employer articulated no relevant non-discriminatory reasons for its employment decision and therefore left the plaintiff‘s prima facie case on liability unrebutted. The court held that the reasons the employer offered—the applicant‘s qualifications—were not relevant because the employer “knew nothing about [them] at the time of the rejection“. 660 F.2d at 1332. In other words, the evidence of nondiscriminatory motive that the employer offered to justify its decision was
The majority also overlooks the distinction made in Price Waterhouse between the liability and remedy phases. Justice Brennan‘s plurality opinion in Price Waterhouse explains why the clear-and-convincing standard applies in the after-acquired-evidence context, where the issue is the proper remedy, while the preponderance standard applies at the liability stage:
It is true, as [the plaintiff] emphasizes, that we have noted the clear distinction between the measure of proof necessary to establish the fact that petitioner had sustained some damage and the measure of proof necessary to enable the jury to fix the amount.... Likewise, an
Equal Employment Opportunity Commission (EEOC) regulation does require federal agencies proved to have violatedTitle VII to show by clear and convincing evidence that an individual employee is not entitled to relief.... And finally, it is true that we have emphasized the importance of make-whole relief for victims of discrimination.... Yet each of these sources deals with the proper determination of relief rather than with the initial finding of liability.... Because we have held that, by proving that it would have made the same decision in the absence of discrimination, the employer may avoid a finding of liability altogether and not simply avoid certain equitable relief, these authorities do not help [the plaintiff] to show why we should elevate the standard of proof for an employer in this position.
490 U.S. at 253-54, 109 S.Ct. at 1792-93 (internal quotations and citations omitted) (emphasis added).
The rationale for elevating the standard in cases such as this one and Nanty, is straightforward. In both mixed-motive cases (Price Waterhouse) and after-acquired-evidence cases (this case and Nanty), the court is forced to determine what an employer would have done if it had not engaged in illegal discrimination; because it is the employer‘s bad act that puts the court to this effort, the employer bears the burden of proof. But in the cases in the latter category, the employer who bears this burden has already been proven to have made an employment decision solely on the basis of an illegally discriminatory motive. The post hoc justifications of what such an employer “would have done” if it had not discriminated are properly viewed with greater suspicion than the actual, legitimate, partial motives of the employer in a mixed-motive case. Therefore, the employer‘s burden in an after-acquired-evidence case is higher and should be so. Applying the Nanty standard in this case is the proper course, that is, if we decide the issue at all.
The majority also points out that Congress, in amending
If the issue were properly before the court in this case, I would follow our precedent and impose the clear-and-convincing standard. Because the majority reaches out to decide issues that are not before us, and then decides them wrongly, I dissent.
UNITED STATES of America, Plaintiff-Appellee, v. Vernon WATTS, Defendant-Appellant.
No. 94-10272
United States Court of Appeals, Ninth Circuit
Jan. 24, 1996
Rehearing Denied April 2, 1996