Muzquiz v. City of Emeryville

Facts

The Fair Employment and Housing Act and its federal analogues both forbid age-based employment discrimination. As the court framed the governing law, “[b]oth federal and state law prohibits employers from discriminating against employees on the basis of age.” (Muzquiz v. City of Emeryville (2000) 79 Cal.App.4th 1106, 1115–1116, citing Gov. Code, § 12941, subd. (a), 42 U.S.C. § 2000e et seq., and 29 U.S.C. § 621 et seq.) Although the state and federal schemes “differ in some particulars, their objectives are identical, and California courts have relied upon federal law to interpret analogous provisions of the state statute.” (Id. at p. 1116.)

Frances Muzquiz began working for the City of Emeryville in 1981, “when she was 62 years of age.” (Muzquiz, supra, 79 Cal.App.4th at p. 1110.) In 1984 she became secretary to the city manager, performing “the usual duties required of a secretary: typing, dictation, photocopying, and handling the city manager’s mail, telephone calls and appointments.” (Ibid.) John Flores became city manager in January 1988 and was thereafter Muzquiz’s sole supervisor, “with ultimate authority for evaluating as well as hiring and firing her.” (Ibid.) In Flores’s opinion, her job performance was “minimally satisfactory.” (Ibid.)

The age-related evidence was thin and indirect. When Muzquiz applied for promotion to assistant to the city manager, Flores allegedly told her “he was considering a younger person for the job,” and another employee, Antoinette Watson, told Muzquiz on several occasions she “would like to have [Muzquiz’s] job whenever [she] retired,” to which Muzquiz replied she would “probably be retiring in two years.” (Muzquiz, supra, 79 Cal.App.4th at pp. 1110–1111.) Muzquiz also testified that after 1990 Flores commented “about coming in to work when [she] could be in retirement” and suggested she “might be able to go on trips and travel with [her] daughter . . . during [her] retirement.” (Id. at pp. 1110–1111.) Critically, however, “[a]ppellant acknowledged that Flores never asked her when she would be retiring from her job.” (Id. at p. 1111.)

Against that, the City marshaled extensive evidence of poor performance. City Attorney Anne Haden testified that Muzquiz “read books and newspapers on the job, failed to answer the telephone while at her desk, failed to file work properly, left work early without notice,” made “numerous and repetitive typographical errors,” and “failed or refused” to perform assigned tasks. (Muzquiz, supra, 79 Cal.App.4th at p. 1111.) Haden testified she “would not have Frances Muzquiz as [her] secretary under any circumstances,” and that her unwillingness was not “in any way at all based upon her age.” (Id. at p. 1111, fn. 2.) Assistant City Manager Ellen Cherner-Whitton documented Muzquiz’s “numerous job-related failings” in two 1990 memoranda, reporting that she spent “25 to 50 percent of her work time” doing duties that belonged to Muzquiz. (Id. at pp. 1112–1113.) Assistant City Attorney Michael Biddle and Mayor Nora Davis offered similar firsthand observations. (Id. at pp. 1111–1112.)

In early 1993 the City faced “a severe budgetary crisis” projected to produce “a City budget shortfall of at least $2.7 million,” and because the California Constitution barred deficit spending, the city council directed that each department cut 25 percent and that cuts be chosen “by the criterion of which cuts would have the least impact on the services provided by the City to the public.” (Muzquiz, supra, 79 Cal.App.4th at pp. 1113–1114.) Flores proposed eliminating the city-manager-secretary position and merging its duties into a combined position reporting to the city attorney. (Id. at p. 1114.) Both Haden and Biddle made clear they would not work with Muzquiz; Haden said “under no circumstances” would she accept Muzquiz, and Biddle said he “would start looking elsewhere” for employment. (Id. at p. 1114.) Effective June 30, 1993, “at Flores’s suggestion appellant elected to retire . . . rather than be laid off,” and her duties were eliminated, assumed by the city manager, or shifted to the city attorney’s existing secretary, Cora Pressley — who “was over 40 years of age at that time.” (Id. at pp. 1114–1115.)

Procedural history

Muzquiz filed suit on June 24, 1994, pleading three causes of action: breach of implied-in-fact contract and wrongful discharge, breach of the covenant of good faith and fair dealing, and age discrimination under Government Code section 12900 et seq. (Muzquiz, supra, 79 Cal.App.4th at p. 1115.) The trial court granted summary adjudication for the City on the first two causes, and the case proceeded to a bench trial — both sides having waived a jury — “solely on appellant’s claim of age discrimination.” (Ibid.)

After “an 11-week trial,” the court entered judgment for the City. (Muzquiz, supra, 79 Cal.App.4th at p. 1115.) In “its lengthy and detailed statement of decision,” the trial court found that Muzquiz had failed to establish a prima facie case because she had not shown satisfactory performance or qualification for the combined position; that, assuming a prima facie case, the City had “articulated legitimate, nondiscriminatory, budgetary and economic reasons”; and that Muzquiz “had failed to carry her burden” of proving those reasons were pretextual and that age was the “‘determining influence’” or “‘motivating factor’” in the decision. (Id. at pp. 1115–1116.) Muzquiz appealed, and after the appeal was filed she died; the appeal was thereafter prosecuted by her estate. (Id. at p. 1109 & fn. 1.) The Court of Appeal affirmed. (Id. at p. 1126.)

Issue

The appeal raised a recurring conceptual muddle. Muzquiz contended “the trial court committed prejudicial error, both by adopting an erroneous burden of proof and by considering inadmissible evidence at trial.” (Muzquiz, supra, 79 Cal.App.4th at p. 1109.) The threshold question was therefore which standard of proof governs an age-discrimination claim after it survives summary judgment and is tried to a factfinder — and, correspondingly, what an appellate court reviews. A second cluster of questions concerned whether the trial court erred in admitting testimony and memoranda about Muzquiz’s job performance, and whether the statement of decision adopted an erroneous burden of proof or failed to resolve material issues. (Id. at pp. 1122, 1124.)

Holding

Reasoning

The burden-shifting framework is for screening, not for trial. The court began with the familiar McDonnell Douglas structure: an age-discrimination plaintiff “ultimately bears the burden of proving that the challenged adverse employment action was based on the employee’s age,” and because direct evidence is rare, “the courts have established a system of shifting burdens.” (Muzquiz, supra, 79 Cal.App.4th at p. 1116, citing McDonnell Douglas Corp. v. Green (1973) 411 U.S. 792, 802–805.) The employee must first make out a prima facie case; if she does, “the employer is then required to offer a legitimate, nondiscriminatory reason,” after which “the burden then shifts back to the employee to demonstrate . . . that the employer’s stated reason . . . was in fact a pretext.” (Id. at pp. 1116–1117.) But the court’s key move was to insist that this construct is an instrument for deciding cases as a matter of law, not a trial standard. Drawing on Caldwell v. Paramount Unified School Dist. (1995) 41 Cal.App.4th 189 and St. Mary’s Honor Center v. Hicks (1993) 509 U.S. 502, it held that “once the employer has succeeded in carrying its burden of production, the entire framework for shifting presumptions and burdens between the parties ‘drops from the case’ and is no longer relevant.” (Muzquiz, supra, 79 Cal.App.4th at p. 1117.) At that point “the trier of fact proceeds to decide the ultimate question: whether the employee has proven that the employer intentionally discriminated.” (Id. at pp. 1117–1118.)

The parties — not the trial court — confused the standards. The court located the error not in the judgment below but in the briefing. Both sides “persist[ed] in framing the issues in terms of the framework of evidentiary stages and shifting burdens appropriate to pretrial or prejudgment motion proceedings.” (Muzquiz, supra, 79 Cal.App.4th at p. 1118.) Because the case had already survived summary judgment and been tried, “the shifting burdens of proof regarding appellant’s prima facie case and the issue of legitimate nondiscriminatory grounds were actually irrelevant.” (Id. at pp. 1118–1119.) Although the statement of decision was “framed in terms of specific findings in line with the progressively shifting burdens,” the trial court had used those findings merely as “the underlying evidentiary basis for its ultimate determination,” and had made “a specific negative finding on the ultimate issue properly before it.” (Id. at p. 1119.) The statement of decision thus “presented an accurate statement of the law.” (Ibid.)

Substantial evidence — viewed for the prevailing party — compelled affirmance. Reframing the appeal as a sufficiency challenge, the court emphasized the deference owed to the factfinder: “our task is simply to review the record to determine whether there was sufficient substantial evidence to support the trial court’s decision,” resolving “all conflicts in favor of the verdict.” (Muzquiz, supra, 79 Cal.App.4th at p. 1120.) The appellate court “is not in a position to weigh any conflicts or disputes in the evidence, or to assess the credibility of the witnesses; that is the province of the trial court alone.” (Id. at p. 1121.) On that standard the court had “no difficulty” affirming: the City proved “a severe budgetary shortfall,” a council directive to cut costs with least impact on services, and the “completely unsuccessful” experiment of sharing Muzquiz’s services with the city attorney, which failed “due to a combination of appellant’s poor job performance, negative attitude, and inability or unwillingness to work with others.” (Id. at pp. 1120–1121.) That the City retained Pressley — “already the city attorney’s secretary” and “better qualified than appellant” — was “additional evidence reinforcing the conclusion that the City’s action was not a product of age-based discrimination.” (Id. at p. 1121.)

“Stray remarks” about retirement did not carry the plaintiff’s burden. The decisive point on the merits was the poverty of the age evidence. There was “virtually no evidence” that the elimination of Muzquiz’s position rested on age; she failed to show the budget crisis was “unreal, contrived or exaggerated,” that the budgetary process was “illegitimate or pretextual,” or that the staff was “insincere.” (Muzquiz, supra, 79 Cal.App.4th at pp. 1121–1122.) “The only evidence appellant was able to offer were a few isolated conversations in which City Manager Flores and Watson mentioned her possible retirement in passing,” and she offered “no evidence any supervisor or superior ever asked her when she would be retiring from her job.” (Id. at p. 1121.) Although the opinion does not deploy the federal “stray remarks” label, its logic is the same: passing, ambiguous references to retirement, untethered to the challenged decision, do not raise an inference of discriminatory motive sufficient to overturn a contrary factual finding.

The job-performance evidence was properly admitted — and partly invited. Turning to the evidentiary challenge, the court held the appellant bears “the burden of demonstrating both that the evidence at issue was erroneously admitted, and that the error was prejudicial.” (Muzquiz, supra, 79 Cal.App.4th at p. 1122.) Muzquiz had effectively conceded that her job performance was “relevant to the central issue in this case: whether the City’s articulated budgetary reasons . . . were pretextual.” (Id. at p. 1123.) Testimony from Mayor Davis, former acting city manager Doane, and records consultant Zapata Davis was relevant to performance and to impeach Muzquiz’s claim that she had never been criticized; Haden’s testimony about Muzquiz’s interactions with a former secretary, “although hearsay as to the truth of the matters asserted, was admitted on the issue of Haden’s state of mind.” (Id. at pp. 1123–1124.) As to Cherner-Whitton’s memoranda, the court held Muzquiz had “waived any objection . . . by previously examining Cherner-Whitton about them on direct examination during appellant’s case-in-chief.” (Id. at p. 1124.)

The statement of decision needed only ultimate facts. Finally, the court rejected the contention that the statement of decision adopted an erroneous burden or left issues unresolved. A trial court “need do no more than state the grounds upon which the judgment rests,” setting out “only ultimate rather than evidentiary facts.” (Muzquiz, supra, 79 Cal.App.4th at pp. 1124–1125; Code Civ. Proc., § 632.) Because Muzquiz had “necessarily concede[d]” that her performance bore on whether to retain her position during a 25-percent workforce cut, the court did not err in “addressing the ample evidence of appellant’s poor job performance in the context of its discussion of the central issue.” (Muzquiz, supra, at pp. 1125–1126.) The statement of decision adequately addressed the budget process and the grounds for finding the decision unmotivated by age. (Id. at p. 1126.)

Significance

Muzquiz is a clean, citable articulation of a proposition that trips up litigants and trial courts alike: the McDonnell Douglas burden-shifting framework is a device for testing claims before trial — on summary judgment, nonsuit, or directed verdict — and it does not survive into the trial itself. Following Caldwell and St. Mary’s Honor Center, the court held that once the employer carries its burden of producing a legitimate reason, “the entire framework for shifting presumptions and burdens . . . ‘drops from the case,’” leaving the factfinder to decide the single ultimate question of intentional discrimination. (Muzquiz, supra, 79 Cal.App.4th at pp. 1117–1118.) The decision matters most for how it disciplines appellate argument: a party who briefs a tried discrimination case as though the prima-facie elements and the pretext “stage” remain live is fighting the wrong battle, because the appellate question collapses into substantial-evidence review of the factfinder’s ultimate determination. (Id. at pp. 1118–1120.)

The opinion is also a sobering illustration of how decisive the standard of review is. Reviewed de novo, an age-discrimination plaintiff’s passing-remark evidence might at least reach a jury; reviewed for substantial evidence after a defense verdict, the same record is hopeless, because the appellate court must indulge “all reasonable and legitimate inferences in order to uphold the verdict” and “is without power to substitute its own inferences.” (Muzquiz, supra, 79 Cal.App.4th at pp. 1120–1121.) The case thus belongs to the line — alongside Hersant, Caldwell, and Martin v. Lockheed — establishing that FEHA age claims rise or fall on evidence of motive, and that a documented, economically driven reduction in force coupled with substantiated performance problems is a formidable defense. Its limits should not be overstated: the holding is procedural and evidentiary, not a pronouncement that retirement remarks are categorically irrelevant. On a thinner defense record, or at summary judgment, the same remarks could carry more weight.

Key quotes

“[O]nce the employer has succeeded in carrying its burden of production, the entire framework for shifting presumptions and burdens between the parties ‘drops from the case’ and is no longer relevant.” (Muzquiz v. City of Emeryville (2000) 79 Cal.App.4th 1106, 1117.)

“At this stage, therefore, the intermediate construct of shifting presumptions and burdens dropped from the case, leaving only the ultimate issue of whether appellant lost her job with the City because of discrimination against her on the basis of age. It remained appellant’s affirmative burden to prove this.” (Id. at p. 1118.)

“The only evidence appellant was able to offer were a few isolated conversations in which City Manager Flores and Watson mentioned her possible retirement in passing.” (Id. at p. 1121.)

Read the full opinion (Justia) →

Practice pointer

Open questions

The opinion resolved the case on substantial-evidence review and did not reach several questions latent in its facts. It expressly declined to decide whether Muzquiz had established a prima facie case, treating that question as immaterial once the case had been tried: “the shifting burdens of proof regarding appellant’s prima facie case and the issue of legitimate nondiscriminatory grounds were actually irrelevant.” (Muzquiz, supra, 79 Cal.App.4th at pp. 1118–1119.) The court therefore had no occasion to address how the prima-facie “replacement by a significantly younger person” element applies where the position is eliminated and its duties absorbed by an existing employee who is herself over 40 (id. at pp. 1116, 1115) — a recurring difficulty in reduction-in-force cases. Nor did the opinion define how directly a retirement-related remark must connect to the adverse decision before it becomes probative of motive rather than a disregarded aside; it held only that these particular remarks, “in passing,” did not suffice. (Id. at p. 1121.) Finally, because the contract and good-faith causes of action were resolved on summary adjudication and not appealed, the opinion says nothing about the viability of those theories on these facts. (Id. at p. 1115.)