Foroudi v. The Aerospace Corp.

Facts

The Aerospace Corporation operates a nonprofit, federally funded research and development center that provides technical analyses to the federal government on launch, space, and related ground systems; more than 90 percent of its funding comes from federal defense and intelligence agencies. (Foroudi v. The Aerospace Corp. (2020) 57 Cal.App.5th 992, 995.) David Foroudi — holder of degrees in mathematics and computer science, industrial engineering and operations research, and computer and information science — was hired in 2007, at age 55, as a senior project engineer. After his original program was cancelled in 2009, he transferred to the navigation division as a “Level 3” senior project engineer/technical lead for the GPS/OCX program office. (Ibid.)

Aerospace’s paper trail predated any dispute. Foroudi’s supervisors counseled him about deficiencies in interpersonal and communication skills and warned that failure to improve could bring corrective action; his 2010 and 2011 evaluations flagged those areas for improvement while rating him “meets expectations”; and he was counseled several times for noncompliance with corporate travel policies, though never formally disciplined. (Foroudi, supra, 57 Cal.App.5th at pp. 995–996 & fn. 2.) Under the governing collective bargaining agreement, management annually ranked all bargaining-unit employees into five “bins” by performance, strength and breadth of skills, and the utility of those skills to the company; Foroudi was placed in bin 5 — the lowest — in both 2010 and 2011, reflecting the communication assessments and his “limited background in navigation relating to GPS, despite being a technical lead on a GPS project.” (Id. at p. 996.)

In late 2011, Aerospace learned its funding would be significantly impacted by projected Department of Defense budget cuts and began a company-wide reduction in force (RIF). The eligibility pool comprised employees ranked in bins 4 and 5 in 2011, unranked new employees, and employees on displaced status; upper management then applied an “RIF Selection Matrix” ranking RIF-eligible employees on criteria including bin ranking, performance issues, and skills applicable to the unit’s anticipated future workload. (Foroudi, supra, 57 Cal.App.5th at p. 996.) Foroudi’s managers selected him purportedly because he was in the lowest bin, lacked “a strong background in scientific, algorithmic applications for GPS navigation,” and had the counseling history; he was notified in March 2012. (Ibid.) Aerospace’s government-contract revenue fell nearly $36 million in fiscal year 2012, and it laid off 306 of its 4,000 employees. (Ibid.) Of the 96 employees remaining in Foroudi’s former division, one was in his 80’s, two were in their 70’s, 17 in their 60’s, 46 in their 50’s, 24 in their 40’s, and six in their 30’s. (Id. at pp. 996–997.) No one was hired to replace him: his position was eliminated and his remaining duties given to Van Nuth, an existing navigation-division engineer 14 years younger — then a “Level 2” — who holds a doctorate in geophysics with a concentration in satellite geodesy and had been recruited, per supervisor Alexander Polack, to “address the most critical configuration item” of the OCX program, which Polack called the “jewel[] of OCX and GPS”; Polack considered Nuth a GPS expert. (Id. at p. 997.)

The administrative record became half the case. In January 2013 Foroudi filed a DFEH complaint alleging discrimination, harassment, and retaliation on five bases — age, association, family care or medical leave, national origin, and religion — without alleging any specific facts in support; the next day the DFEH closed the case and issued a right-to-sue notice. (Foroudi, supra, 57 Cal.App.5th at p. 997.) More than a year later he filed an amended DFEH complaint alleging he was laid off because of his religion, age (60), and Persian ancestry, asserting that before the layoff notice he “received excellent employee evaluation and commendations,” and that afterward his managers “began telling me that I was not following directives,” restricted his hotel choices when traveling, and gave him the low bin ranking that resulted in the layoff. (Ibid.) He also filed an EEOC charge in January 2013 (not in the appellate record); the EEOC issued a right-to-sue letter in May 2014. (Ibid.) After the federal court struck his class and disparate impact allegations (below), he persuaded the EEOC in 2015 to reopen his charge for an “administrative error” and to issue a new right-to-sue letter reciting that “workers over the age of 40 are being discriminated and laid-off as a class,” and in April 2016 he asked the DFEH to “correct documents” to match and filed a second amended DFEH complaint adding class and disparate impact allegations. The DFEH confirmed the filing and an interview, took no further action, and issued no new right-to-sue notice. (Id. at pp. 998–999.)

Procedural history

In August 2014, Foroudi and four other former Aerospace employees sued in superior court for FEHA age discrimination, wrongful termination in violation of public policy, failure to prevent discrimination, and unfair competition, alleging the RIF was “a pretext to hide its true and illegal motivation” and had a disparate impact on employees over 50. (Foroudi, supra, 57 Cal.App.5th at p. 998.) A January 2015 first amended complaint added a federal ADEA claim and class allegations; Aerospace removed, then moved to strike the disparate impact and class allegations. The district court granted the motion in April 2015, finding the EEOC charge and DFEH complaint expressed no intention to sue on behalf of a class and contained no disparate impact allegations — an exhaustion failure. Foroudi dismissed the ADEA claim with prejudice, and the case returned to superior court. (Ibid.) In August 2016 — armed with the amended EEOC charge and second amended DFEH complaint — Foroudi sought leave to file a second amended complaint restoring the stricken theories; the trial court denied leave “for the reasons set forth in [Aerospace’s] Opposition,” which had argued futility. (Id. at p. 999.) Aerospace then moved for summary judgment; Foroudi opposed with his own declaration and one from Mark Simpson, his union’s president, attaching RIF statistics. The court granted the motion and entered judgment. (Id. at pp. 999–1000.) The Court of Appeal affirmed both rulings, awarding Aerospace costs. (Id. at pp. 1000, 1011.)

Issue

Three questions. First, could Foroudi cure the exhaustion defect in his class and disparate impact claims through (a) an EEOC charge amendment and reissued federal right-to-sue letter, or (b) a DFEH complaint amendment filed years after the agency closed his case and after he had sued — that is, do such amendments exhaust, and does the relation-back doctrine save them? Second, were the statistical exhibits offered through the union president’s declaration admissible? Third, did Foroudi raise a triable issue that Aerospace’s RIF rationale was a pretext for age discrimination? (Foroudi, supra, 57 Cal.App.5th at pp. 1000–1001, 1006–1008.)

Holding

Reasoning

An EEOC fix cannot exhaust a FEHA claim. The court reviewed the denial of leave to amend for abuse of discretion, noting amendment is liberally granted but “should not be granted where, in all probability, amendment would be futile.” (Foroudi, supra, 57 Cal.App.5th at pp. 1000–1001, quoting Vaillette v. Fireman’s Fund Ins. Co. (1993) 18 Cal.App.4th 680, 685.) Foroudi’s proposed second amended complaint was “premised exclusively on state law,” so every argument built on the reopened EEOC charge — including his equitable plea that the EEOC’s own “administrative error” caused the exhaustion failure — suffered “the same fatal flaw.” (Id. at p. 1001 & fn. 3.) Martin v. Lockheed had rejected a nearly identical maneuver: “an EEOC right-to-sue notice satisfies the requirement of exhaustion of administrative remedies only for purposes of an action based on [federal law].” (Id. at pp. 1001–1002, quoting Martin, supra, 29 Cal.App.4th at p. 1726.) The work-share-agreement theory of Ware v. Nicklin Associates (D.D.C. 2008) 580 F.Supp.2d 158 failed because Foroudi identified no provision of the EEOC-DFEH work-share agreement giving a federal letter that dual effect. (Id. at p. 1002.)

A post-closure, post-complaint DFEH amendment is too late — and relation back cannot rescue theories the original charge cannot carry. FEHA exhaustion is “mandatory”: an employee “may not proceed in court with a FEHA claim without first obtaining a right-to-sue letter,” and claims falling outside the scope of the DFEH complaint are barred. (Foroudi, supra, 57 Cal.App.5th at pp. 1002–1003, citing McDonald v. Antelope Valley Community College Dist. (2008) 45 Cal.4th 88, 106, and Yurick v. Superior Court (1989) 209 Cal.App.3d 1116, 1123.) Foroudi’s 2016 amendment came “more than three years after the DFEH had permanently closed his case and nearly two years after he filed his civil complaint” — and DFEH regulations provide that amending a complaint in a closed case does not reopen it. (Id. at p. 1003 & fn. 4, citing Cal. Code Regs., tit. 2, § 10022, subd. (e).) Exhaustion exists to give the administrative remedy a real chance to resolve the dispute; “[t]hat purpose would not be served if a plaintiff could exhaust his administrative remedies by adding substantive new allegations to an administrative complaint after the administrative case had been closed and the plaintiff had already filed a civil complaint, as Foroudi attempted to do here.” (Ibid.) The amendment was also untimely under the then-applicable one-year filing deadline of former Government Code section 12960, subdivision (d). Adopting the Ninth Circuit’s framework, the court held “the relation-back doctrine is available in appropriate circumstances to render timely an otherwise untimely amendment to a charge under FEHA” — but only if the original charge’s factual allegations are “able to bear the weight of the new theory added by amendment,” and the DFEH’s “mere acceptance of an amendment” is not conclusive; the court analyzes relation back de novo. (Id. at pp. 1003–1004, quoting Rodriguez v. Airborne Express, supra, 265 F.3d at pp. 898–899.)

Applying the test: disparate treatment allegations cannot carry disparate impact or class theories. Invoking Raytheon Co. v. Hernandez (2003) 540 U.S. 44, 52, the court distinguished disparate treatment (liability turns on actual motive) from disparate impact (facially neutral practices falling more harshly on a protected group without business-necessity justification). (Foroudi, supra, 57 Cal.App.5th at p. 1004.) Foroudi’s original DFEH complaint contained no facts at all; his first amendment’s “gravamen” was that managers targeted him — telling him he was not following directives, restricting his hotel choices, and giving him the “low ranking grade.” Neither “allege[d] or even suggest[ed] any facially neutral policy that fell more harshly on older employees.” (Ibid.) The class theory fared worse: “the complaints did not even allege that a single other employee in the protected age group was laid off as part of the RIF” — and the passage Foroudi claimed alleged classwide discrimination came from his 2015 EEOC charge, not his DFEH filing. (Id. at pp. 1004–1005.) Amendment being futile, denial of leave was proper. (Id. at p. 1005.)

The evidentiary gate: statistics need a sponsor. Foroudi’s opposition rested heavily on exhibits Q, R, and S — tables of RIF statistics with “hypergeometric evaluations” and bar charts. He laid foundation through union president Mark Simpson, who said Aerospace’s HR department had provided RIF data to the union and that exhibit Q was a “tabulation” of it — but “Simpson did not identify who prepared exhibit Q,” and no one laid any foundation for the charts. (Foroudi, supra, 57 Cal.App.5th at p. 1006 & fns. 6–8.) Reviewing for abuse of discretion, the court upheld the hearsay rulings: the exhibits were out-of-court statements offered for their truth (Evid. Code, § 1200, subd. (a)), and although the underlying data might have come in as a party admission, that exception “does not extend to the exhibits themselves, which are statistical analyses of that data created by unidentified persons.” (Id. at pp. 1006–1007.)

The merits framework — with the modern summary judgment gloss. The court recited the Guz burden-shifting structure and the Hersant “substantial evidence” standard, and framed the review posture with Perry v. Bakewell Hawthorne, LLC (2017) 2 Cal.5th 536, 542, and Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826, 854: summary judgment is “no longer called a ‘disfavored’ remedy” but “‘a particularly suitable means to test the sufficiency’” of a case. (Foroudi, supra, 57 Cal.App.5th at p. 1005.) It added the employee-side caution from Featherstone v. Southern California Permanente Medical Group (2017) 10 Cal.App.5th 1150, 1159: opposition evidence, though liberally construed, “‘remains subject to careful scrutiny’”; “subjective beliefs” and “uncorroborated and self-serving declarations” do not create a genuine issue; the evidence must show “‘an actual causal link between prohibited motivation and termination’”; and the “stronger the employer’s showing of a legitimate, nondiscriminatory reason, the stronger the plaintiff’s evidence must be.” (Id. at pp. 1007–1008.) Assuming a prima facie case, Aerospace’s showing — a company-wide RIF responding to “potentially severe cuts to its funding,” with standardized selection criteria and individualized performance grounds — met its burden, exactly as in Martin, where a RIF driven by adverse economic conditions sufficed. (Id. at p. 1008, citing Martin, supra, 29 Cal.App.4th at pp. 1731–1732.)

Why each pretext theory failed. The younger replacement. Foroudi’s lead argument — that his duties went to Nuth, 14 years younger and, he declared, less qualified, lower ranked, and lower paid — ran into the structure of the RIF: “he was not simply replaced by Nuth. Rather, the undisputed evidence shows Aerospace eliminated Foroudi’s position and gave his duties to Nuth,” which “essentially created a new position that combined Foroudi’s and Nuth’s former duties. It is not enough, therefore, for Foroudi to show he was more qualified than Nuth for his former position. Instead, to raise an inference of discrimination, he must show, at the very least, that he was as qualified as Nuth for the new, combined position. Foroudi makes no attempt to do so.” (Foroudi, supra, 57 Cal.App.5th at pp. 1008–1009.) His attack on Polack’s description of Nuth’s credentials was “irrelevant because Polack never claimed in his declaration that these were the reasons Aerospace retained Nuth.” (Id. at p. 1009 & fn. 9.) The statistics. Even if admissible, statistics in a disparate treatment case “must meet a more exacting standard”: they “must demonstrate a significant disparity and must eliminate nondiscriminatory reasons for the apparent disparity.” (Ibid., quoting Life Technologies Corp. v. Superior Court (2011) 197 Cal.App.4th 640, 650, disapproved on other grounds in Williams v. Superior Court (2017) 3 Cal.5th 531.) Foroudi’s data reflected only ages, genders, and bin rankings before and after the RIF; it “does not account for age-neutral factors that were considered in connection with the RIF, such as an employee’s experience, performance, and the anticipated future need for the employee’s skills.” (Ibid.) The “minor issues” theory. Evidence that his interpersonal shortcomings were trivial could not, in a company-wide RIF, raise an age inference by itself: “he would have to show that younger employees with comparable issues, and who were otherwise similarly situated, were not selected for the RIF. Foroudi does not even attempt to make such a showing.” (Id. at p. 1010.) The remainder. Simpson’s “lay opinion, based on undisclosed accounting information,” could not create a triable issue on whether the RIF was necessary; Foroudi’s prior Boeing status was irrelevant to his undisputed Level 3 position; and his personal observation that he never saw anyone over 60 promoted had “minimal probative value.” (Ibid. & fn. 10, citing McGrory v. Applied Signal Technology, Inc. (2013) 212 Cal.App.4th 1510, 1537.) The court closed with Guz: “[G]iven the strength of the employer’s showing of innocent reasons, any countervailing circumstantial evidence of discriminatory motive, even if it may technically constitute a prima facie case, is too weak to raise a rational inference that discrimination occurred.” (Id. at pp. 1010–1011, quoting Guz, supra, 24 Cal.4th at p. 362.)

Significance

Foroudi is the contemporary blueprint of the defensible RIF — the case defense counsel model their layoffs on, and therefore the case employee-side counsel must read as a map of what has to be attacked. The defense architecture has four load-bearing walls, each of which the opinion validates: (1) a documented economic trigger (projected budget cuts; a $36 million revenue decline); (2) a standardized, criteria-driven selection process (annual bins, an RIF Selection Matrix) predating the layoff decision; (3) individualized, contemporaneously documented performance grounds; and (4) elimination — not backfilling — of the position, with duties absorbed by a retained employee whose distinct qualifications serve the anticipated workload. (Foroudi, supra, 57 Cal.App.5th at pp. 996–997, 1008.) The combined-position holding is the doctrinal core: once the job is restructured, the relevant comparison is the new job, and a plaintiff’s superiority in the old one proves nothing. (Id. at pp. 1008–1009.)

For employees, the opinion is candid about what was missing — and thereby instructive about what would have sufficed. The statistics failed not because statistics cannot prove disparate treatment but because these controlled for nothing: under the Life Technologies standard the analysis must “eliminate nondiscriminatory reasons,” meaning a regression or matched comparison accounting for the employer’s own selection criteria, sponsored by an identified, qualified declarant — the court all but said the underlying company data was obtainable as a party admission. (Foroudi, supra, 57 Cal.App.5th at pp. 1007, 1009.) The comparator gap was equally decisive: no showing that younger employees with similar counseling histories survived the matrix. (Id. at p. 1010.) And the exhaustion holding is a standing procedural warning under the substantive regime of Government Code section 12940: class and disparate impact theories must be planted in the DFEH charge itself, within the limitations period, while the administrative case is alive — an EEOC amendment cannot exhaust FEHA claims (Martin), a closed DFEH case cannot be revived by amendment, and relation back reaches only theories the original charge’s facts can carry. (Id. at pp. 1001–1005.) With the DFEH’s successor agency now operating under a three-year filing period for FEHA claims, the deadline arithmetic has changed, but Foroudi’s structural rules about scope, closure, and relation back have not.

Key quotes

“All of Foroudi’s arguments related to the EEOC charge and right-to-sue notice suffer the same fatal flaw: the exhaustion of EEOC remedies does not satisfy the exhaustion requirements for state law claims.” (Foroudi, supra, 57 Cal.App.5th at p. 1001.)

“It is not enough, therefore, for Foroudi to show he was more qualified than Nuth for his former position. Instead, to raise an inference of discrimination, he must show, at the very least, that he was as qualified as Nuth for the new, combined position. Foroudi makes no attempt to do so.” (Foroudi, supra, 57 Cal.App.5th at pp. 1008–1009.)

“‘[T]o create an inference of intentional discrimination, statistics must demonstrate a significant disparity and must eliminate nondiscriminatory reasons for the apparent disparity.’” (Foroudi, supra, 57 Cal.App.5th at p. 1009, quoting Life Technologies Corp. v. Superior Court (2011) 197 Cal.App.4th 640, 650.)

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Practice pointer

Open questions

Foroudi decides the relation-back question while flagging that “neither party points us to any California authority on the issue” — it adopts the Ninth Circuit’s Rodriguez framework as a matter of persuasion, leaving the doctrine’s California contours (and any divergence from Rodriguez) for future decisions. (Foroudi, supra, 57 Cal.App.5th at p. 1003.) The court did not decide whether a work-share agreement could ever give an EEOC filing dual state-federal exhaustion effect; it held only that Foroudi identified no such provision. (Id. at p. 1002.) On the merits, the opinion assumes without deciding that Foroudi made a prima facie case (id. at p. 1008), and it does not address what evidence would show that a “new, combined position” was itself constructed as a vehicle for age preference — the combined-position rule presupposes a bona fide restructuring. Nor does it define how exacting the Life Technologies “eliminate nondiscriminatory reasons” standard is in practice — whether controlling for the employer’s principal criteria suffices or every conceivable neutral factor must be excluded. (Id. at p. 1009.) Finally, because Foroudi conceded the underlying HR data might have been admissible as a party admission, the opinion leaves open how far a properly sponsored analysis of that data would have changed the calculus. (Id. at p. 1007.)